FREE ENTERPRISE FUND and BECKSTEAD AND WATTS, LLP, Petitioners v. PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD et al., 561 U.S. 477

Summary

15 U.S.C.S. § 78y did not strip the district court of jurisdiction over the claims. The Court held that the dual for-cause limitations on the removal of Board members contravened the Constitution's separation of powers. The Sarbanes-Oxley Act not only protected Board members from removal except for good cause, but withdrew from the President any decision on whether that good cause existed. That decision was vested instead in other tenured officers--Security and Exchange Commissioners--none of whom was subject to the President's direct control. The result was a Board that was not accountable to the President, and a President who was not responsible for the Board. The unconstitutional tenure provisions were severable from the remainder of the statute. Concluding that the removal restrictions imposed by 15 U.S.C.S. §§ 7211(e)(6) and 7217(d)(3) were invalid left the Board removable by the Commission at will, and left the President separated from Board members by only a single level of ...