Laura: Thanks for sharing this; it clarifies the argument.
Best,
Rick

----- Original Message -----
From: "Ginger, Laura" <[log in to unmask]>
Date: Wednesday, February 8, 2006 11:54 am
Subject: Challenge to SOX

> There is a bit on the constitutional issue in this article.
> Laura
> 
> February 7, 2006
> Anti - Tax Group Challenges Sarbanes - Oxley 
> By THE ASSOCIATED PRESS
> Filed at 8:21 p.m. ET
> 
> WASHINGTON (AP) -- A law that reshaped the accounting industry 
> after a
> wave of corporate scandals is being challenged on constitutional 
> groundsby pro-business conservatives.
> 
> Their big-guns legal team includes Kenneth Starr, best known as the
> special prosecutor in the Monica Lewinsky affair. Bitterly opposed to
> the sweeping anti-fraud law, they are challenging the board it
> established to oversee the accounting industry, arguing that it 
> violatesthe Constitution's mandated separation of powers among the 
> threebranches of government.
> 
> The Free Enterprise Fund, an anti-tax group that seeks limited
> government, filed suit Tuesday in federal court in Washington against
> the accounting board, known as the Public Company Accounting Oversight
> Board.
> 
> Christi Harlan, a spokeswoman for the board, said she had no immediate
> comment because the board hadn't yet seen the lawsuit.
> 
> The anti-fraud law, known as the Sarbanes-Oxley Act for its
> congressional sponsors, could be invalidated if any of its 
> sections is
> found unconstitutional. Opponents want it sent back to Congress 
> for a
> revision.
> 
> The 2002 law, among other things, required greater financial 
> disclosuresand increased the criminal penalties for securities fraud.
> 
> Until now, the objections to the law have come mainly from publicly
> traded companies -- especially smaller ones -- focusing on one key
> section of it. They want an easing of its requirements for 
> reporting on
> the strength of internal financial controls.
> 
> Federal regulators and lawmakers have been receptive to their 
> complaintsabout the burden of complying, but the Sarbanes-Oxley 
> law itself has not
> been called into question.
> 
> ''We hope to drive a wedge into the gross abuse of bureaucracy,'' the
> challenging group's chairman, Mallory Factor, said in a telephone
> interview.
> 
> Factor called the law ''a gross overreaction'' by Congress to the wave
> of business scandals in 2002 that included Enron Corp., WorldCom Inc.
> and Tyco International Ltd. The five members of the Public Company
> Accounting Oversight Board ''have massive unchecked power,'' he said.
> 
> Factor, a merchant banker in New York who's proud to say he grew 
> up poor
> in Bridgeport, Conn., has been a prolific fundraiser for President 
> Bush,serving as a ''Ranger'' raising hundreds of thousands of 
> dollars for his
> 2004 re-election campaign. Now he is taking on a law that the 
> presidentsigned.
> 
> Factor minces no words, calling another business-related law
> ''Stalinist.'' He said last spring that the ''liberal media and
> government'' had been unfairly attacking free-market principles 
> and the
> embattled House majority leader at the time, Tom DeLay.
> 
> The Free Enterprise Fund paid for television ads likening the 
> media and
> their reporting on DeLay to sharks in a feeding frenzy.
> 
> Along with Starr, also litigating the case are Viet Dinh, a former
> assistant attorney general in the Justice Department in Bush's first
> term, and Michael Carvin, a private attorney who was a member of the
> Bush legal team during the presidential vote recount in 2000.
> 
> They are arguing that the makeup of the accounting board violates the
> separation of powers doctrine because its members aren't appointed by
> the president and cannot be removed by him, and Congress cannot 
> controlits budget. The chairman of the oversight board and the 
> other four
> directors are appointed by the Securities and Exchange Commission, an
> independent federal agency; the accounting board is funded by fees on
> publicly traded companies according to their size.
> 
> Congress created the board to replace the accounting industry's own
> regulators amid the business scandals, giving it subpoena power 
> and the
> authority to discipline accountants. The corporate fiascos of 2001-
> 2002exposed inadequate internal controls and auditors at major 
> companies who
> had become too cozy with the corporations whose books they examined.
> 
> The way the Sarbanes-Oxley law is written, Carvin contends, it is
> difficult for the SEC to remove accounting board members and it has
> insufficient control over the board's actions.
> 
> Peggy Peterson, spokeswoman for Rep. Michael Oxley, R-Ohio, 
> chairman of
> the House Financial Services Committee, and one of the law's two 
> leadingauthors, said Oxley had no comment on the lawsuit. A 
> spokesman for Sen.
> Paul Sarbanes, D-Md., didn't immediately return a telephone call 
> seekingcomment.
> 
> ------
> 
> On the Net:
> 
> Free Enterprise Fund: www.freeenterprisefund.org
> 
> Public Company Accounting Oversight Board: http://pcaobus.org
> 
> 
> -----Original Message-----
> From: Academy of Legal Studies in Business (ALSB) Talk
> [mailto:[log in to unmask]] On Behalf Of Ginny Maurer
> Sent: Wednesday, February 08, 2006 11:17 AM
> To: [log in to unmask]
> Subject: 
> 
> 
> I am failing to grasp the constitutional claims just from the 
> article on
> SOX challenge. Anyone seen anything on this claim? I am teaching 
> it in
> two different courses next week.
> 
> Ginny
>