It frequently seems as though the SEC and its partisans believe there is some sort of securities law exemption from the constitution. What is proxy regulation other than regulation of speech, after all? What is the shareholder proposal rule other than compelled speech? And so on. We see this again in a recent post by Broc Romanek seemingly characterizing the lawsuit challenging the constitutionality of the PCAOB and, implicitly, SOX itself a "mistake."
Regular readers know that I'm no fan of judicial imperialism, but the idea that courts should refrain from striking down an unconstitutional law because some reformers think it would be a "mistake" is a bit of a stretch even for me. If Congress violated the appointments clause in creating the PCAOB, as it did, and Congress messed up by failing to include a severability provision in Sarbanes-Oxley, as it did (and so much, by the way, for Broc's theory that SOX was well thought out), on what possible basis would a court refrain from striking down said law? We are not dealing here with the penumbras and emanations that judges rely on for their most controversial rulings. We are dealing with the express text of the Constitution. To which there is, after all, no SEC exemption.
