August 22, 2008

Two-to-one opinion by a panel of the U.S. Court of Appeals for the District of Columbia Circuit, upholding the creation of a nonprofit board to set auditing requirements and oversee accounting firms that audit public companies. The authority of the Public Company Accounting Oversight Board had been challenged by Beckstead and Watts, a Nevada accounting firm, and the Free Enterprise Fund, as violating the constitutional separation of powers.

The ruling is here. From Washington Post, "Appeals Court Upholds Sarbanes-Oxley Act":

In dissent, Judge Brett M. Kavanaugh wrote that Sarbanes-Oxley renders the accounting oversight board "unaccountable and divorced from Presidential control to a degree not previously countenanced in our constitutional structure." He said "such unaccountable power is inconsistent with individual liberty.

Kavanaugh also termed the case "the most important separation-of-powers case regarding the President's appointment and removal powers to reach the courts in the last 20 years."

• Statement by SEC Chairman Christopher Cox, welcoming the decision.


• Statement from Beckstead and Watts.


• Bloomberg, "Sarbanes-Oxley Audit Panel Upheld by Appeals Court"


• Hans Bader of the Competitive Enterprise Institute comments at Open Market blog, "Court Uses Inconsistent Reasoning to Reject Sarbanes Oxley Challenge."