(CN) The Supreme Court on Monday struck down a challenge to the corporate reform law known as the 2002 Sarbanes-Oxley law, finding unconstitutional the way members of an accounting oversight board could be removed. The 2002 law was enacted to prevent fraud after accounting scandals at Enron were exposed.
The high court dismissed a broad challenge to a part of the law that created the Public Accounting Oversight Board, which regulates the accounting industry.
“The Sarbanes-Oxley Act remains ‘fully operative as a law’ with these tenure restrictions excised,” Chief Justice John Roberts wrote. “Concluding that the removal restrictions are invalid leaves the board removable by the commission at will, and leaves the president separated from board members by only a single level of good-cause tenure.
“The commission is then fully responsible for the board’s actions, which are no less subject than the commission’s own functions to presidential oversight.”
The Sarbanes-Oxley Act was signed into law in the wake of accounting scandals at Enron and Worldcom.
The act sought to overhaul securities laws by creating a board to monitor the accounting industry, and was named after Sen. Paul Sarbanes, D-Md., and Rep. Michael G. Oxley, R-Ohio.