The Sarbanes-Oxley Act, the legislation enacted following the Enron meltdown, will now be reconsidered by the Supreme Court. The Washington Post reports:
The Supreme Court yesterday agreed to consider a challenge to the Sarbanes-Oxley Act of 2002, the centerpiece of the government’s response to the watershed accounting scandals at Enron and Worldcom.
The case tests the constitutionality of a nonprofit oversight board created to regulate auditors of public companies. Plaintiffs in the case, including a Nevada accounting firm, allege that the oversight board was endowed with unchecked government powers.
If the court agrees, it could force Congress to reopen the debate over one of the most sweeping pieces of business legislation since the 1930s. Supporters say the Sarbanes-Oxley Act has helped protect investors; critics say it has imposed costly burdens on corporations.
The court accepted the case for consideration in the term that begins in October.
Congress enacted Sarbanes-Oxley after big accounting firms such as the now-defunct Arthur Andersen failed to protect shareholders from a wave of accounting manipulations that made corporations look healthier and more profitable than they really were. Until 2002, the accounting profession was largely responsible for making its own rules and overseeing itself.
Hat tip to Reason Magazine’s blog.
And just so you know: If you’re like most business and are still trying to grasp the complexities of this law, you could probably use our book, The Sarbanes Oxley Act: A Practical Guide for Companies, which is authored by attorneys from Ice Miller.