Starr on the case against SOX

Ken Starr writes in the WSJ to support his constitutional case against the PCAOB – which if accepted would bring down SOX. (It is a tribute to the haste and sloppiness of the act's creation that it contains no clause saving the rest of the Act if a particular provision is declared unconstitutional.)

As Starr explains, the case essentially rests on the power of the PCAOB. That power is particularly evident in its rules under SOX 404. These rules and the PCAOB's enforcement of 404, and not the provision's sparse and relatively innocuous language, are the source of the enormous costs that have sparked consternation and hand-wringing in executive suites, on Wall Street and in NY and Washington. Few if any acts of Congress or regulations of constitutionally-constituted agencies have had the effect of the PCAOB's AS2.

If Starr's case is successful, as I've argued, Congress should do more than just fix the Constitutional problem. As Henry Butler and I explain in our book, The Sarbanes-Oxley Debacle, the problems with SOX go much deeper than just the PCAOB (or 404, for that matter). We make specific suggestions for fixing these problems, should Congress be handed the opportunity.