SarbOx: Not Just Dumb, But Unconstitutional?


The U.S. District Court in D.C. is scheduled to hear arguments tomorrow in a lawsuit challenging the constitutionality of the Sarbanes-Oxley corporate finance reform law, filed by the free-market think tank the Competitive Enterprise Institute, the Free Enterprise Fund, and Beckstead and Watts, an accounting firm.

From the CEI press release, the plaintiffs are

asking the Court to declare [SarbOx] unconstitutional under the Appointments Clause of the Constitution. That clause requires major government officials to be appointed by the President and confirmed by the Senate. However, the five-member accounting oversight board is virtually a quasi-private organization with no accountability to the President or the Congress that created it. It has the power to micro-manage companies' accounting procedures, impose taxes, and fine companies up to $2 million. Complying with the Board's rules cost the economy more than $35 billion in its first year alone.

Full CEI study on the topic of Sarbanes-Oxley's unconstitutionality.

Full text of court filing by the plaintiffs. (This filing, despite the CEI press release, does not seem to specifically name CEI as a plaintiff.)

My Reason feature roundtable of interviews from various professionals coping with Sarbanes-Oxley's effects, from our January 2006 issue.