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Legal Commentary

: Prawfs

Open Thread for Prawfs on Free Enterprise Fund v. PCAOB

By Dan Markel, Ethan Leib, Rick Garnett, Matt Bodie, Paul Horwitz , Steve Vladeck, and Orly Lobel

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Below is the BNA squib, and the opinion can be found here. Any reactions?

Free Enterprise Fund v. Public Company Accounting Oversight Board,No. 08-861. Provisions in the Sarabanes-Oxley Act of 2002 setting out the mechanism for removing a member of the Public Company Accounting Oversight Board violate the Constitution's separation of powers because they unduly restrict the president's constitutional authority over an inferior (as opposed to a principal) executive officer. The removal mechanism in Sarbanes-Oxley calls for removal of a PCAOB member by the Securities and Exchange Commission only for cause, and members of the SEC themselves are removable by the president only for cause; the dual for-cause limits violate the Constitution because they make the board not accountable to the president and the president not responsible for the board. The Sarbanes-Oxley provision governing removal of a PCAOB member is severable from the rest of the act. The PCAOB structure does not violate the Appointments Clause of the Constitution.

Full post as published by Prawfs on June 28, 2010 (boomark / email).