Wednesday, February 08, 2006
The Free Enterprise Fund has joined an accounting firm in challenging the constitutionality of the PCAOB created by SOX. The primary argument in the complaint is that the process of appointing PCAOB members -- which is done by the SEC -- violates the appointments clause of the US Constitution.
The issue is whether the PCAOB members are low-level appointees whose appointment by the SEC is sufficient, or high-level appointees whose appointment must be made by the President and confirmed by the Senate. This issue was debated back on 2002 when SOX was passed and the current challenge to SOX has little chance of winning now.