In an increasingly predictable 5-4 split, the Supreme Court today struck down a portion of the controversial Sarbanes-Oxley Act, though unanimously decided to leave the rest of the legislation intact.

The gist? The Court says the structure of the Public Company Accounting Oversight Board, a not-for-profit corporation with broad regulatory authority over accounting firms that audit publicly traded companies, violates separation of powers principles. Now, the Securities and Exchange Commission will have the power to boot PCAOB board members as it sees fit.

I’ll leave it to legal experts to comment on the case. But what are the reputational questions here for some of our most important institutions?

Though on the broader issue the Court was unambiguous, it was yet another predictable 5-4 ruling along the same ideological fault lines we’ve now come to expect on most major issues. Does this continued pattern diminish the credibility of one of our most revered institutions if it seems to be yet another rendition of the back-and-forth between red and blue in Congress? While I’m hardly a Constitutional scholar, I believe most people – save for the most cynical among us – think of the Court as “above” that. The question … is that changing?

Is the reputation of the federal government such that we trust it to oversee yet another body responsible for protecting the public? (I’m not even going to venture a stab at this one.) What about the reputation of the PCAOB?

Of course, the reasons the board was established – inspecting public accounting firms, enforcing ethical standards for audit reports, and punishing corruption – are right and worthy. But will those in the business community think differently of it now, though its mission of protecting the public from corruption remains?

Today I have more questions than answers. Would love to hear what you think.

cwinters General Corporate PCAOB, SOX, Supreme Court