Tuesday, November 18, 2008

Sarbanes-Oxley Headed for Court

SCOTUSblog reports that the Free Enterprise Fund will file a cert. petition after the D.C. Circuit denied en banc review of the panel decision in Free Enterprise Fund v. Public Company Accounting by a slim 5-4 margin.

The Fund brought this facial challenge under the Appointments Clause and separation of powers to Title I of the Sarbanes-Oxley Act, which established the Public Company Accounting Oversight Board under the authority of the SEC and with members appointed by the SEC and removable only for cause. 

A divided (2-1) panel of the D.C. Circuit ruled that the Board violated neither the Appointments Clause nor separation of powers.  The court:

We hold, first, that the Act does not encroach upon the Appointment power because, in view of the Commission's comprehensive control of the Board, Board members are subject to direction and supervision of the Commission and thus are inferior officers not required to be appointed by the President.  Second, we hold that the for-cause limitations on the Commission's power to remove Board members and the President's power to remove Commissioners do not strip the President of sufficient power to influence the Board and thus do not contravene separation of powers, as that principle embraces independent agencies like the Commission and their exercise of broad authority over their subordinates.

The panel decision is here.  It's rather lengthy, so I've edited it here.

I'll post the cert. filings when they come out.

SDS

http://lawprofessors.typepad.com/conlaw/2008/11/sarbanes-oxley.html

Appointment and Removal Powers, Recent Cases, Separation of Powers | Permalink

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