Supreme Court’s pending decision could have big effect on business

Here’s one from the what-to-watch file:

A Supreme Court opinion could come soon on a case that some business interests say could have serious effects on corporate governance.

At issue in Free Enterprise Fund v. Public Company Accounting Oversight Board is whether the Sarbanes-Oxley corporate accounting law – which was established ealier this decade in the midst of all those corporate scandals – violates the Constitution by giving the Securities & Exchange Commission power to appoint members of the Public Company Accounting Oversight Board.

That board, created by the law, is made up of private sector members who are supposed to oversee the auditors of public companies with a goal of protecting investors.

The Free Enterprise Fund, a nonprofit that promotes free enterprise, contends that the Constitution allows only the president or heads of his cabinet to appoint members to the board. Ultimately, anti-regulation interests say, the board is not accountable to anyone as it makes the rules that govern public accounting while also enforcing them.

Some observers say that if the Court rules in favor of Free Enterprise Fund, the decision could have far-ranging implications for the Sarbanes-Oxley Act – which was designed as an anti-fraud law stemming from the Enron scandal.

The effect could go even further, challenging the power of independent federal agencies such as the SEC and the Federal Communications Commission.

For its part, the government vigorously defends the board, noting that it is ultimately accountable to the SEC, which is appointed by the president.

This is definitely one to watch, especially in light of the debate over increased regulation in the marketplace going in Congress.



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