Starr Mounts Challenge to Sarbanes - Oxley

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A constitutional challenge by conservatives to the law that reshaped corporate governance after a wave of business scandals likely will end up before the Supreme Court, attorney Kenneth Starr says. The legal action that Starr is mounting against the Sarbanes-Oxley anti-fraud law is one of a trio of assaults targeting it, as small companies push for regulatory exemptions and some lawmakers prepare legislation to change it. With memories fading of the corporate fiascos of 2002 that began with Enron Corp.'s collapse, opponents of the law and its mandates on public companies and the accounting industry are banking on a changing political climate.

Starr, the former special prosecutor who led the Monica Lewinsky and Whitewater investigations of President Clinton, is one of the attorneys bringing the federal court case on behalf of a pro-business conservative group, the Free Enterprise Fund. They are challenging the board established by the 2002 law to oversee the accounting industry, arguing that it violates the Constitution's mandated separation of powers among the three branches of government.
''This constitutes an excessive delegation of power by the executive branch,'' Starr said in a telephone interview Thursday.

The five-member Public Company Accounting Oversight Board, endowed by the law with subpoena power and the authority to discipline accountants, ''is a board that exercises real power in the marketplace.'' ''This is a cop on the beat,'' said Starr. Given the nature of the issues raised in the case, he said, ''It is quite likely that the Supreme Court would be interested in this case eventually.'' Christi Harlan, a spokeswoman for the oversight board, said Friday, ''We're going to vigorously defend our powers.''

The board's attorneys will make the case in writing by May 15, as requested by the judge, why the Free Enterprise Fund's suit should be dismissed, she said. Oral argument before U.S. District Judge James Robertson is set for June 29. Sen. Paul Sarbanes of Maryland, the senior Democrat on the Senate Banking Committee and one of the law's two leading authors, insists there is nothing unconstitutional about the oversight board, its formation or its operation.

http://www.nytimes.com/aponline/us/AP-Sarbanes-Oxley.html