Court of Appeals Upholds PCAOB, SOX Constitutionality


The U.S. Court of Appeals for the District of Columbia upheld a lower court decision on the constitutionality of the PCAOB and Sarbanes-Oxley Act, which spawned the regulator.

The plaintiffs in Free Enterprise Fund v. PCAOB argued that SOX and the PCAOB violate the appointments clause, separation of powers and nondelegation principles of the Constitution because PCAOB board members hold significant regulatory power yet are appointed by the SEC, not by the president with the advice and consent of the Senate.

The appeals court held 2-1 that the manner in which PCAOB board members are appointed and overseen under Sarbanes-Oxley is constitutional. SEC commissioners, who are appointed by presidential nomination with Senate consent, “exercise comprehensive control over Board procedures and decisions and Board members. For instance, the Commission approves all Board rules,” Justice Judith W. Rogers wrote for the majority in the appellate court ruling.

SPONSORED REPORT

CPEOs provide peace of mind around payroll services

The creation of these new IRS-certified service providers for small businesses clarifies some issues around traditional professional employer organizations.

QUIZ

8 sentences to help you master subject-verb agreement

When professionals prepare written material for readers inside their organization or outside, they should make sure that no errors distract from the message they need to convey. Take this short quiz for practice in subject-verb agreement.