Last Updated on Monday, 7 December 2009 05:45 Written by dbhalling Monday, 7 December 2009 05:45

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Is Sarbox Constitutional?

The Supreme Court is reviewing whether the Public Company Accounting Oversight Board created by Sarbanes Oxley is Constitutional.

According to Yahoo Finance,

“A small Nevada accounting firm and an anti-tax group brought the challenge to the 2002 Sarbanes-Oxley law, arguing that the board created by the law violates the Constitution’s separation of powers mandate because the president cannot appoint or remove its members.”

“The board wields too much, unchecked power, Michael Carvin, the challengers’ lawyer told the court.”

I have discussed the untold damage Sarbanes Oxley has caused to U.S. innovation.  For more information see Sarbanes Oxley – the Medicine is Worse than the Disease and Sarbanes Oxley – the Medicine is Worse than the Disease-2 .

The Supreme Court in recent history has rarely found that there has been an unconstitutional delegation of power.  It is possible that Board may violate the Administrative Procedure Act, but I do not believe that this is the issue before the Supreme Court.  Even if the Supreme Court were to rule that the Board is unconstitutional, this is unlikely to significantly reduce the damage caused by Sarbox.  The good news is that Sarbox seems to be under attack on a number of different fronts.