Court Upholds Constitutionality of the PCAOB
September 8, 2008
On August 22, 2008, the DC Circuit Court of Appeals upheld the constitutionality of the PCAOB in Free Enterprise Fund v. PCAOB. Free Enterprise argued that Title 1 of the Sarbanes-Oxley Act of 2002, which created the PCAOB, violated the Appointments Clause of the Constitution and separation of powers because it did not permit adequate Presidential control of the PCAOB. The court disagreed holding that the Sarbanes-Oxley Act does not violate the Appointments clause because, in view of the comprehensive control of the PCAOB by the SEC, whose members are appointed by the President, the members of the PCAOB are not required to be appointed by the President. The court stated that the Sarbanes-Oxley Act “vests a broad range of duties” in the PCAOB, but the PCAOB’s “exercise of those duties is subject to check” by the SEC “at every significant step.”
http://www.iasplus.com/usa/pcaob/0808courtdecision.pdf
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