SOX It To The Supremes

The Supreme Court is reviewing the constitutionality of the Sarbanes-Oxley Act (SOX), the legislation put in place to regulate the accounting industry after Enron. Business groups and the accounting industry say the regulatory board set up to oversee accounting is itself unconstitutional.

The justices said they will consider a challenge to the Sarbanes-Oxley law from pro-business conservatives, who complained that the board established by the law to oversee the accounting industry violates the constitutionally mandated separation of powers.

The law had been upheld by a federal appeals court in Washington.

The opponents argue that the makeup of the accounting board violates the separation of powers doctrine because its members aren't appointed by the president and cannot be removed by him, and Congress cannot control its budget.

The chairman of the Public Company Accounting Oversight Board and the other four directors are appointed by the Securities and Exchange Commission, an independent federal agency.

The accounting board is funded by fees on publicly traded companies according to their size. Congress created the board to replace the accounting industry's own regulators amid the business scandals, giving it subpoena power and the authority to discipline accountants.

Keep this challenge in mind the next time conservatives complain about activist judges trying to interfere with Congress. After all, to overturn this law would be an unusual step in enforcing the court's will upon the legislative process, yes?

And that only happens to stupid hippie laws that want to regulate things like accounting or the financial industry. Why, there's no evidence that these industries need any additional oversight...