Yesterday, the Supreme Court held that the Public Company Accounting Oversight Board’s mechanism for removing its officers violated the constitution. Formed by the Sarbanes-Oxley Act, in response to the Enron scandal, the PCAOB has been challenged since its inception. Today’s ruling is another signal from the Roberts Court that the rights of corporations are more important than the rights of individuals. The Court ruled that since the PCAOB’s members are appointed by the Securities and Exchange Commission, and not removable by the President except for cause, such an arrangement violated the Constitution’s separation of powers. According to the Wall Street Journal:
Congress had given the five-member board, a not-for-profit corporation, broad regulatory authority over accounting firms that audit publicly traded companies. . . .
Roberts said the structure of the accounting board violated constitutional separation-of-powers principles because it was too difficult for the president to remove board members.
The majority did not invalidate PCAOB completely, finding that the offending provision was severable from the other parts of the statute. But as Breyer’s dissent points out, the Court’s ruling “threatens to disrupt severely the fair and efficient administration of the laws” because the decision struck down protection for members from removal for political reasons and could be expanded to apply to other government officers.
This decision – which as noted by Justice Breyer poses a serious threat to the functioning of the government and the board - is just another that can be added to the long list of pro-business decisions made by the Roberts Court. By further complicating the PCAOB, the Supreme Court is tacitly supporting corporations, rather than protecting the public from predatory practices.