June 28, 2010, 6:20 PM — Put away the party hats. Put the champagne glasses down, when SCOTUS (Supreme Court of the United States) rules that part of Sarbanes-Oxley (SOX), a set of federal laws that spell out the financial disclosure and fiscal responsibilities of a company's executives was unconstitutional, many people thought SOX was dead, dead, dead!
Ahem. No such luck. Businesses are still stuck with filling out SOX's endless paperwork. What SCOTUS actually did with SOX was to narrowly rule that Congress overstepped its authority when establishing the PCAOB (Public Company Accounting Oversight Board), a non-profit corporation that oversees the auditing and enforcement of SOX.
All that really happened, was that SCOTUS ruled that Congress blew it when setting up the board and allowing the SEC (Securities and Exchange Commission), which appoints the board members, to remove them only "for good cause shown" and not allowing the president the power to directly remove board members.
Bummer right? Many, perhaps most, company executives cordially dislike SOX. They see SOX as being a wasteful and costly government intrusion into business. And, throwing salt into the wound, it doesn't even do what it was supposed to do.
As critics of SOX might say while SOX was designed to prevent the kind of white-collar looting that first pumped up, and then killed, companies such as Enron and WorldCom, it sure didn't do anything about the even greater crimes and incompetence that lead to the collapse of companies such as AIG, Countrywide, and Lehman that were once worth billions. But, so what? SOX did nothing to stop this global recession level of financial mismanagement, and this decision did little more than re-arrange the deck-chairs on the Titanic.
So why were people so excited about this decision if it did so little? I think it was because there was a hope, even an expectation, that SCOTUS would kill SOX. As one New York Times analysis story trumpeted before the decision: "Supreme Court Rolls Back a Law Born of Enron". It's a totally misleading headline and the decision wasn't even out when this piece was written!
Oh well, be that as it may, despite much wishful thinking and twittering, the simple truth is that we're still stuck with SOX. So, how's your SOX paperwork coming?