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

Last week’s stunning Supreme Court decision that will now allow corporations and labor unions to spend an unlimited amount on election campaigns has sent shock waves across the political landscape with some lauding the sanctity of the First Amendment and others predicting the downfall of democracy as we know it. The case brought together an unusual coalition of the right (Chamber of Commerce) and left (ACLU) in support of scuttling McCain-Feingold. Opinions on what this will mean for the 2010 elections and beyond span a broad spectrum as Members of Congress and the Obama Administration are already debating legislative initiatives to take on the ruling.

As politicians and the pundit corps look ahead breathlessly to a new electoral dynamic, corporations need to closely review the decision and do a thorough analysis of how best to proceed. The American public is very upset and while Washington is getting the brunt of the blame, corporations are not far beyond in terms of negative sentiment. Banks, health insurers, big energy and others who are seen as the likely beneficiaries of the new spending freedom have seen their reputations battered in America’s widespread pushback against large institutions. From the Tea Party movement to the Move Your Money campaign to increased shareholder lawsuits and proxy challenges, the public is in a fighting mood.

Thus corporate boards and executives will need to proceed cautiously and judge how increased political contributions and activism will impact all of their stakeholders. Though the shackles are now off, the spotlight on corporate involvement in campaigns will be brighter. Profligate spending on election campaigns will be a focus for the media and online communities. Protecting corporate reputation, promoting the interests of shareholders and addressing consumer/public sentiment will all need to be weighed when companies make the decision to exercise the new rights bestowed on them by the Supreme Court.

Richard Tauberman can be reached at rtauberman@mww.com.

rtauberman General Corporate campaign finance, corporate boards, reputation, Supreme Court