A great comment and article on the editorial page of the New York Sun on the US Court of Appeals decision concerning the PCAOB and Sarbanes-Oxley.
The issue is whether Sarbanes-Oxley’s creation of an agency to police auditors of public companies violated the doctrine of separated powers.
The chief constitutional problem with the law is that the five board members at this new agency — the Public Company Accounting Oversight Board of the suit’s caption — aren’t appointed by the president. Nor can the president fire them. Instead the commissioners of the Securities and Exchange Commission, who are presidential appointees, get to do the hiring and firing for the new Oversight Board. And the firing can only be for cause.
The Sun points out that the dissenting judge, Brett Kavanaugh, was an associate council of Bush at the time that he signed Sarbanes-Oxley into law in 2002. Kavanaugh also served under Kenneth Starr during the Clinton investigation, and was a principal author of the Starr Report. Senator Kennedy,who opposed Kavanaugh’s appointment to the Court of Appeals, called him “a political operative who is the least experienced and most partisan appointee to the court in decades.”
Here’s Floyd Norris of the New York Times with some interesting articles on 1) the PCAOB and the court’s ruling, and 2) how politics manipulates a board that exerts tremendous influence and control over public companies.