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Will Free Enterprise Fund v. PCAOB Go Up?

Last Monday, the U.S. Court of Appeals for the D.C. Circuit denied the Free Enterprise Fund's petition for rehearing en banc in Free Enterprise Fund v. PCAOB, a challenge to the constitutionality of the Public Company Accounting Oversight Board created by the Sarbanes-Oxley Act, by a vote of 5-4. Chief Judge Sentelle and Judges Griffith, Kavanaugh, and Ginsburg voted for rehearing. Judges Henderson, Rogers, Tatel, Garland, and Brown voted against. A copy of the order is here. The Fund's attorneys at Jones Day and the Competitive Enterprise Institute promise a petition for certiorari is forthcoming.

John Moore (www):
Regardless of its legality, Sarbanes-Oxley (SOX) is certainly bad policy. It greatly burdens companies, disproportionately smaller ones. I believe that, like HIPPA, in some cases it makes a federal crime out of business incompetence.

SOX slows down the response time of companies, by putting a number of procedural hurdles in the middle of their processes. Friends who work in IT at a SOX-affected company report considerable bureaucracy involved in formerly routine software changes (including software that is not financial in nature).

SOX drives companies to incorporate outside the US.

In the greatest irony, SOX may have been one of the contributors to the meltdown, by causing the sudden insolvency of healthy companies through the required mark-to-market rules. Even so, it didn't do a bit of good in preventing the catastrophe.

Let's hope it gets thrown out.
11.23.2008 9:21pm
GMUSL '07 Alum (mail):
What is up with Janice lately? Talk about a Greenhouse effect!
11.24.2008 1:48am