A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit sided with Sarbanes-Oxley last week when it decided the issues raised in a suit filed against the Public Company Accounting Oversight Board (PCAOB) did not merit a trial.
The plaintiffs alleged that, inasmuch as Sarbanes-Oxley created the PCAOB so that its members are appointed by the Securities and Exchange Commission, the law violates the Appointments Clause of the U.S. Constitution. The Appointments Clause requires executive officers to be appointed by the President, subject to the advice and consent of the Senate.
According to The Washington Post, the majority decided that the plaintiffs lost much of their case decades ago "when the Supreme Court upheld the constitutionality of independent agencies." Therefore, the court upheld the decision of U.S. District Judge James Robertson to dismiss the case.
One panel member, however, agreed with the plaintiffs that Sarbanes-Oxley left the PCAOB with no oversight. In the dissenting opinion, Judge Brett Kavanaugh said the board was "unaccountable and divorced from Presidential control to a degree not previously countenanced in our constitutional structure."
The plaintiffs, including the Free Enterprise Fund and the Nevada-based accounting firm of Beckstead & Watts, have indicated they will appeal the decision.