Free Enterprise Fund v. Public Company Accounting Oversight Board

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Free Enterprise Fund v. Public Company Accounting Oversight Board
Seal of the United States Supreme Court.svg
Argued December 7, 2009
Decided June 28, 2010
Full case name Free Enterprise Fund and Beckstead and Watts, LLP v. Public Company Accounting Oversight Board, et al.
Docket nos. 08–861
Citations 561 U.S. ___ (more)
130 S. Ct. 3138, 177 L. Ed. 2d 706 (2010)
Prior history Judgment for defendants affirmed, 537 F. 3d 667 (CADC 2008), cert. granted, 556 U. S. ___ (2009)
Holding
The dual for-cause limitations on the removal of members of the Public Company Accounting Oversight Board contravene the Constitution’s separation of powers, but the unconstitutional limitations are severable from the remainder of the statute. The Board's appointment is consistent with the Appointments clause. Court of Appeals for the District of Columbia Circuit reversed in part, affirmed in part, and remanded.
Court membership
Case opinions
Majority Roberts, joined by Scalia, Kennedy, Thomas, Alito
Dissent Breyer, joined by Stevens, Ginsburg, Sotomayor
Laws applied
U.S. const., art. II

Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U. S. ____ (2010),[1] was a case decided by the United States Supreme Court on June 28, 2010. The court held, on a 5-4 vote, that the method through which members Public Company Accounting Oversight Board, which supervises compliance with the Sarbanes–Oxley Act, are removed violates the United States Constitution's separation of powers.

The Supreme Court separated this portion of the Act, while keeping the remainder of the rules imposed by the law intact.

Under the Sarbanes–Oxley Act, officers of the Public Company Accounting Oversight Board (PCAOB) enjoyed dual layers of "for cause" protection against Presidential removal. PCAOB officers could be removed only "for good cause shown" by officers of the Securities and Exchange Commission, who in turn could only be removed by the President for "inefficiency, neglect of duty, or malfeasance in office." These dual layers of limitation on the President's ability to remove PCAOB officers led to separation-of-powers violations. PCAOB officers exercised Executive-branch powers by determining policy and enforcing the laws of the United States. Under the Constitution, Executive power is vested in the President and he or she is tasked to “take Care that the Laws be faithfully executed” by Article II. The Supreme Court reasoned that dual layers of removal protection impeded the President's ability to "take Care" by interfering with his or her ability to oversee the faithfulness of officers who execute the law, such as PCAOB officers.

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