Sarbanes-Oxley Audit Board Unconstitutional, Top Court Says

(Corrects in second paragraph to say that law can be fixed by broadening SEC power.)

The U.S. Supreme Court ruled that Congress violated the Constitution when it set up an auditing board after the Enron Corp. and WorldCom Inc. collapses, saying the panel was too insulated from presidential control.

The 5-4 decision stopped short of ordering the work of the Public Company Accounting Oversight Board to stop, instead saying the Securities and Exchange Commission must have unfettered power to fire the board’s members. The board was established by the 2002 Sarbanes-Oxley law.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

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