CEI won a significant victory yesterday in Free Enterprise Fund v. Public Company Accounting Oversight Board, the first Supreme Court case to which we served as co-counsel. The Court held the lack of removal power for PCAOB members to be unconstitutional and opened up an avenue of litigation for entrepreneurs to challenge its current rules and disciplinary actions under the Sarbanes-Oxley Act that created it.
Many people made this victory possible. So here is our “Oscar speech” that tries to thank each of them. (Note to Academy Awards buffs: There is one major difference. There is nothing to be read in those whom we left out. It’s just that there are so many countless people to thank, even for encouraging words that kept us going).
We were very fortunate to have a principled membership organization like the Free Enterprise Fund as a client. Founded by Steve Moore (now of course a prominent editorial writer for the Wall Street Journal), FEF helped bring the focus of fiscal conservatism to new areas such as SOX and securities law. Moore’s successor as FEF chairman, Mallory Fact0r, provided valuable guidance from his vast business acumen as well as the initial funding to bring the case forward. Factor was ably assisted by the fund’s then executive director E. O’Brien Murray. Current FEF chairman Steve Goodrich is continuing the FEF’s good work.
We were also very fortunate to be working with a top legal team, beginning with lead counsel Michael Carvin and his associates at the Jones Day law firm Noel Francisco and Christian Vergonis. And we also had the expertise of the brilliant legal minds of former Solicitor General Ken Starr and former Assistant Attorney General Viet Dinh.
Before the court case, nine separtate amici briefs were also filed on our behalf. Indiana University Law Profess Donna Nagy, who wrote one of the first law review articles exposing the constitutional defects of the PCAOB, organized a brief signed by 15 law professor, including UCLA’s Stephen Bainbridge and Brooklyn College’s Roberta Karmel, the SEC’s first female commissioner who was appointed by President Carter.
Former Attorneys General Edwin Meese, Richard Thornburgh, and William Barr weighed in on a brief from the Washington Legal Foundation. The Cato Institute and its senior fellow Ilya Shapiro filed a brief that highlighted both the costs of Sarbanes-Oxley rules enforced by the PCAOB and incorporated public choice economic theory to show how agency’s incentives are skewed. And Factor again weighed in on our behalf, joining in an amicus brief filed American Civil Rights Union Counsel Peter Ferrara.
Finally, we can never thank enough for his courage and perseverance our client Brad Beckstead, partner in the two-person Henderson, Nev., accounting firm Beckstead & Watts. Nearly five years ago, Beckstead shared with us his concerns that the PCAOB was showering on him and the firms he audited mounds of red tape that increased costs and was of little value to shareholders. We began to discuss filing a lawsuit. Beckstead joined FEF, and they both became the plaintiffs, represented by CEI and the Jones Day legal team. This case is a victory for Brad Beckstead and all the entrepreneurial “Davids” he represents who just beat the “Goliath” of the PCAOB.