Nearly a year ago, CFO.com reported that the Free Enterprise Fund had filed a lawsuit challenging the constitutionality of those portions of the Sarbanes-Oxley Act that established the Public Company Accounting Oversight Board and provide for the appointment of its members. Even more interesting was the fact that former special prosecutor Kenneth Starr was spearheading the legal team.
The suit hit the news again in early fall when the Securities and Exchange Commission joined the fray to defend the law and the PCAOB.
According to an accountingWEB story, the U.S. District Court for the District of Columbia was to begin hearing arguments in the case today.
Lawyers for the Free Enterprise Fund argue that the sections of Sarbox dealing with the PCAOB violate separation of powers and the appointments clause of the U.S. Constitution because they do not require PCAOB members to be appointed by the President and confirmed by the Senate like other federal officers.
If the court agrees with them, the story says, the whole Act could go down because Sarbox has no provision allowing sections adjudged unconstitutional to be severed from the rest of the legislation. However, the story also says the chances of that happening are "slim to nil."