A number of cases on the Supreme Court’s docket this term address issues related to the regulation of attorneys, accountants, and other professionals. The Court’s decisions in these cases could have far-reaching ramifications.
Constitutional Challenge to the PCAOB
Perhaps the most significant of these cases is the constitutional challengeto the Public Company Accounting Oversight Board (PCAOB), presented in Free Enterprise Fund v. Public Co. Accounting Oversight Board, Docket No. 08-861. The PCAOB was created pursuant to the Sarbanes-Oxley Act of 2002, and it regulates auditors of public companies. Such firms are required to register with the PCAOB, which can impose sanctions for violation of securities laws.
The case before the Court raises the issue of whether the method of appointing PCAOB members violates separation of powers or the Appointments Clause. Petitioners argue that the Sarbanes-Oxley Act violates separation of powers because members of the PCAOB are vested with far-reaching executive power, but the President does not have authority to appoint or remove those members or otherwise supervise or control their exercise of the executive power; the court of appeals had held that Congress can restrict the President’s removal authority in any way it “deems best for the public interest.” Petitioners also contend that the Sarbanes-Oxley Act violates the Appointments Clause because members of the PCAOB are not appointed by the President and confirmed by the Senate, nor can they be appointed by the “Head” of a “Department” as is required for inferior officers.
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