By Cydney Posner

Bloomberg and New York Times published articles describing yesterday's Supreme Court hearing on the constitutionality of the PCAOB.

The constitutional question is whether the President can exercise sufficient authority over the agency to satisfy the separation of powers and appointments clauses. If the Court rules against the PCAOB, Congress could simply reauthorize the agency with a more compliant structure.  However, since the PCAOB was created under SOX, Congress would have the "opportunity" to revisit SOX entirely, potentially leading to changes in the law: for example, SOX 404 on internal controls has drawn much criticism, especially as applied to smaller companies, and is a much-discussed candidate for revision in the midst of a deep recession. The articles report that a decision is expected in June or July.

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