In 2002, Congress passed the Sarbanes-Oxley Act in response to the Enron scandal, greatly expanding regulation of American business. It sharply increased criminal penalties for securities law violations, and created an extremely broad new cause of action for employees seeking to sue over alleged retaliation. It also set up the Public Company Accounting Oversight Board (PCAOB) to regulate the accounting firms that audit America’s public companies. The PCAOB has generated endless red tape. Its rules micromanaging companies’ internal controls, which require auditors to examine such minute details as which employee has access to which computer password, cost the American economy billions of dollars, contributing to an overall price tag for Sarbanes-Oxley of at least $35 billion a year.
A small accounting firm, assisted by the Competitive Enterprise Institute, recently filed a lawsuit challenging the PCAOB as a violation of the Constitution’s Appointments Clause.
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