Wow. I did not see this one coming. WebCPA reported Monday that the U.S. Supreme Court has decided to hear the Free Enterprise Fund's lawsuit challenging the constitutionality of the Public Company Accounting Oversight Boardand, by extension, the Sarbanes-Oxley Act of 2002.
The plaintiffs, who argue that the PCAOB violates the Appointments Clause of the U.S. Constitution because its members are selected by the Securities and Exchange Commission rather than being appointed by the president and confirmed by the Senate, have been unsuccessful so far in the lower courts. But Competitive Enterprise Institute attorney Hans Bader said in a statement:
The decision by the Supreme Court to hear the case is good news for American investors and prospects for economic recovery, since a victory in this case will give the president an added incentive and ability to adopt policies that foster economic growth.
For their part, PCAOB representatives say simply:
We remain confident that the PCAOB's structure is constitutional and look forward to an opportunity to demonstrate that...
And despite plaintiffs' argument that a victory for them would benefit the president, the Obama Administration opposes the lawsuit and will file a brief in support of the PCAOB. Solicitor General Elena Kagain argues that the SEC controls the board effectively.