The Supreme Court Affirms the Constitutional Validity of the PCAOB; Strikes Down “Double For-Cause” Removal Provisions as Unconstitutional
Yesterday, in Free Enterprise Fund v. Public Company Accounting Oversight Board, No. 08-861, the Supreme Court held 5-4 that the provisions of the Sarbanes-Oxley Act of 2002 relating to the removal of members of the Public Company Accounting Oversight Board were unconstitutional. In an opinion authored by Chief Justice Roberts, the Court reasoned that the “double for-cause” removal provisions did not make the President sufficiently accountable for the actions of the Board, and therefore were “incompatible with the Constitution’s separation of powers.” The Court nevertheless found the offending provision of the Act was severable. The Court’s decision therefore does not disturb the remainder of the Act and should have little impact on the Board’s ongoing operations.