Corporate & Securities Law

By Jim Hamilton

Oral Argument Set for Supreme Court Case Challenging PCAOB's Constitutionality

The US Supreme Court has set December 7, 2009 as the date for oral argument in the action challenging the constitutionality of the PCAOB. At the same time, the Court extended to October 13, 2009 the deadline for the government?s merits brief in the action.

An audit firm contends that, in creating the Board, the Sarbanes-Oxley Act violated two basic tents of the Constitution: separation of powers and the Appointments Clause. The case is before the Supreme Court on a grant of certiorari of a split panel ruling of the DC Circuit Court of Appeals that the PCAOB?s creation was constitutional. (Free Enterprise Fund and Beckstead & Watts v. PCAOB, Dkt. No. 08-861).

By vesting the power to appoint, remove and review the work of Board members in the SEC, argued the firm, the Act completely and impermissibly burdened the President?s power to control or supervise executive officials. The audit firm contends that, under the Appointments Clause, Board members exercising widespread governmental power are principal officers of the US who must be appointed by the President with the advice and consent of the Senate. Rejecting this claim, the appeals panel concluded that Board members are inferior officers of the United States within the meaning of the Appointments Clause; and thus properly appointed by the SEC.

Full post as published by Jim Hamilton's World of Securities Regulation on September 30, 2009 (boomark / email).