The Big 87654-staffed PCAOB defends the Big 87654's cartel. In 1998 or 1999 I computed the SEC registrant audit industry's "Herfindahl Index", to be 3,700, above the DOJ's 1,800 excessive industry concentration guideline. Well, DOJ, will you bust up the Big 87654? The PCAOB in substance, gives "former" Big 87654 partners semi-retirement sinecures. Seven PCAOB goons at Beckstead! How many multibillion-dollar market cap registrants did Beckstead audit? I applaud the Jones Day lawyers work here. Sarbox did not "impose tough restrictions" on American business. It just increased SEC registrants' paperwork. Securities, wire and mail fraud were criminal before Sarbox. 1977's Foreign Corrupt Practices Act had a "books and records" provision. Sarbox did nothing for investors. The PCAOB exists "to make sure auditors are doing their jobs"? Says who? Even the Big 87654? The PCAOB is shielded from "political influence"? Says who? Is the Fed? Or the FASB? Is the PCAOB's "parent", the SEC?
Thursday, December 10, 2009
"From the marbled corridors of Congress to the tony salons of Georgetown, liberal lawmakers are abuzz with ideas of how to rein in US corporations. Yet over in the courts, two conservative lawyers are mounting a serious challenge to a law, enacted earlier in the decade, that imposed tough restrictions on American businesses. A ruling in their favor could deal a serious blow to the pro-regulatory movement in Washington. ... The two are representing Brad Beckstead, the head of a small auditing firm in Henderson, Nev., who is suing the [PCAOB], the panel created by SarbOx to make sure auditors are doing their jobs. Beckstead says the PCAOB picked apart his business in a grueling 2004 audit. 'I became the poster boy for what not to do when auditing small companies,' he says. The cost of complying with the rules was so great, he claims, that he had to abandon his auditing practice. ... A finding for Beckstead could reopen the entire Sarbanes-Oxley Act. Some board defenders fear a victory for Beckstead could even shake the foundations of established bodies such as the [Fed]. 'The implications are potentially far-reaching,' says Gillian Metzger, a Columbia law professor who is supporting the PCAOB board in filings with the high court. ... In Beckstead, [Michael] Carvin and [Noel] Francisco are taking on their boldest challenge yet. The PCAOB was estalished as an independent nonprofit largely to let it pay market wages for its workers rather than civil servant salaries and to shield it from political influence. In 2004 seven PCAOB auditors descended on Beckstead & Watts to pore over its practices. The result was a detailed report listing deficiencies based on the SarbOx rules. Beckstead penned a spirited response, but he says the cost of complying was too great and he had to shut down his auditing practice", my emphasis, Theo Francis at Businessweek, 30 November 2009, link:
"Congress wants to wallop business with even more regulation in the wake of the financial panic, but perhaps the Members should pause of Monday and visit the Supreme Court. The justices will hear arguments on whether major portions of the last great Congressional overreaction, the 2002 Sarbanes-Oxley Act, are constititional. ... At iuuse is whether the ... PCAOB, which supervises compliance with the law, violates the Constitution's separation of powers. Under the Appointment's Clause, all 'officers' of the [US] must be appointed by the President and accountable to him--a condition PCAOB members do not meet. ... The dissenter on the DC Circuit Panel, Judge Brett Kavanaugh, called the case the most important separation of powers case in 20 years and said the appeals court had created a constitutional hash. Though the PCAOB 'performs numerous regulatory and law enforcement functions at the core of the executive power,' he wrote, for the first time in US history we have an independent agency whose heads are appointed by and removable only for cause by another independent agency.' ... The accounting board's wide-open mandate--to make whatever rules 'may be appropriate in the public interest or for the protection of investors'--has cost the economy nearly $1 trillion according to a study by the AEI and the Brookings Institution. The benefit is supposed to be investor protection. But despite these costs, the law did nothing to warn about the meltdown of mortgage-backed securities, much less expose Bernie Madoff or other fraudsters. ... As the Supremes now take their turn, the case has implications the regulation-loving press corps hasn't notices. A decision to uphold the PCAOB would open the door for Congress to create any number of equally unaccountable regulators across the economy. However, a ruling against the PCAOB could bring down the whole law because Sarbox does not have a 'severability clause,' which means that if one part goes down, the entire law may be invalidated", WSJ Editorial, 4 December 2009: http://online.wsj.com/article/SB10001424052748704107104574571662869948676.html.
"Regarding 'These Men Could Kill SarbOx' ... : I hope SarbOx is eliminated. It certainly didn't help control Bear Stearns, Lehman, and numerous failed banks. If the [PCAOB] cannot prevent financial collapses of that magnitude, why should public corporations have to spend millions of dollars to adhere to useless 'control' mechanisms?", Joseph D.Agostin letter to Businessweek, 14 December 2009.
Members? As the term used in Shakespeare's time? May the Supreme's kill this monster.