Free Enterprise Fund v. Public Company Accounting Oversight Board
August 3, 2009
Congress created the Public Company Accounting Oversight Board (PCAOB) to enforce the Sarbanes Oxley law. But Congress provided for the Securities and Exchange Commission (SEC), not the President, to appoint the members of the PCAOB. The President also has no powers of oversight or removal regarding the board members. Yet the PCAOB has the power to establish standards of criminal misconduct, and to decide on their prosecution and punishment. It also has the power to impose taxes on publicly traded companies, and to set its own budget, again independent of the President.
The Free Enterprise Fund brought suit challenging the constitutionality of this arrangement, arguing that it violated the Separation of Powers Doctrine and the Appointments Clause that requires top Executive Branch officials to be appointed by the President and confirmed by the Senate. The Supreme Court granted a Writ of Certiorari to hear the case, with the ACRU filing a brief urging that action. On August 3rd, the ACRU then filed this brief on the merits urging the Court to strike down the PCAOB and the Sarbanes Oxley law as unconstitutional on these grounds.