US High Court To Hear Appeal On Public Accounting Board

(Updates with details about an additional federal appeals court action in paragraph five)
By Mark H. Anderson
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- The U.S. Supreme Court Monday accepted an appeal by several groups that brought a constitutional challenge to the Public Company Accounting Oversight Board created by 2002 changes in federal accounting laws.
The free-enterprise groups and a Nevada accounting firm sued to stop the Securities and Exchange Commission from naming members of the accounting board, set up by Congress to oversee public company accountants.
"In creating the board, Congress deliberately sought to test the outer boundaries of its ability to reduce presidential power," the groups said in the appeal.
The groups, in their lawsuit, claimed the U.S. Constitution required board members to be appointed by the president or the SEC chairman, rather than the entire commission for the securities agency.
The Supreme Court's decision to hear the appeal breathes new life into the case. The case didn't get much traction in lower courts, although it stirred disagreement among federal judges on the Washington, D.C.-based federal appeals court who split 5-4 on whether to reconsider an earlier appeals court ruling in the case.
The U.S. Solicitor General's office, in court briefs, had urged the high court to reject the appeal, calling it a "poor vehicle" to resolve the constitutional issues raised by the challengers. "The president's control over the SEC is constitutionally sufficient and the act in turn grants the SEC complete and pervasive control over every aspect of the board's authority," Solicitor General Elena Kagan wrote.
A U.S. federal judge dismissed the lawsuit in 2007 and the Washington-based U.S. Federal Circuit Court of Appeals also rejected the challenge in a 2-1 decision last year.
The private, non-profit board is charged with inspecting and disciplining public company accountants.
The case is the Free Enterprise Fund vs. the Public Company Accounting Oversight Board, 08-861. Oral arguments will be held in the fall and a decision is expected by July 2010.
-By Mark H. Anderson, Dow Jones Newswires, 202 862-9254; mark.anderson@dowjones.com