By targeting the PCAOB's ''massive unchecked powers,'' a lawsuit also poses a constitutional challenge to Sarbanes-Oxley.
By challenging the constitutionality of the Public Company Accounting Oversight Board, plaintiffs in a lawsuit filed last week believe that they can spur the courts and Congress to undo the entire Sarbanes-Oxley Act.
While many federal laws have a "severability" provision that enables Congress to change a section of a law without dismantling it entirely, Sarbanes-Oxley doesn't, according to Michael Carvin, a lawyer with Jones Day in Washington and lead attorney for the plaintiffs. A successful lawsuit might prompt a "remedy broader than fixing the board," he adds, and perhaps "force Congress to face the issue" of passing legislation to overhaul Sarbox as a whole.
Indeed, Mallory Factor — chairman of the nonprofit Free Enterprise Fund, which promotes limits on government — acknowledges that the lawsuit is "an attack" on all of Sarbox. In addition to initiating the suit, Factor asserts that the organization has been working with members of the House and Senate on legislation that would do away with the act.
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