A federal judge has dismissed a lawsuit filed by a small Nevada audit firm challenging the constitutionality of the Public Company Accounting Oversight Board.
In a 14-page decision, U.S. District Judge James Robertson ruled against the suit, which was filed by Beckstead & Watts LLP of Henderson, Nev., and later joined by the tax and government reform activist group the Free Enterprise Fund. The suit had not only challenged the PCAOB, but also the Sarbanes-Oxley Act -- the sweeping corporate reform law that mandated the creation of the audit watchdog.
The plaintiffs’ case had centered on the argument that the president should appoint the members of the PCAOB, because the entity functions as part of the government, rather than as part of the Securities and Exchange Commission, where it now resides.
In the decision, the court also said that the plaintiffs didn’t have standing to challenge that structure, as the SEC chairman had voted with the other commissioners in approving the appointments of the current board members -- making the error harmless.
In a statement, the PCAOB said, "We are pleased with the Court's decision and look forward to continuing to fulfill the mandate given us by Congress to protect the interests of investors."
The groups that brought the suit said that they would appeal the decision.
