A rather bizarre story is unfolding in Ft. Worth with regard to Radio Shack chief executive officer, Dave Edmondson.
It appears that Star-Telegram reporter Helen Landy has caught some, ahem, inaccuracies on Edmondson’s resumÈ and corporate biography. But Edmondsonís explanations for the errors are better than the best school child’s explanation of missing homework. His diploma was lost in a fire? He didnít monitor his Web site profile that claimed a psychology degree that his college — Pacific Coast Baptist College in San Dimas, CA. a/k/a Heartland Baptist in Oklahoma City — has never offered? The inaccuracy regarding the type of degree that he received doesn’t make any difference because no one knows the difference between a “Thg” degree and a “BS” degree, anyway?
And then there is the little detail about the multiple DWI incidents.
The Radio Shack board’s “no comment” reaction to all of this indicates that something may be brewing. Stay tuned.

As expected, Houston-based Integrated Electrical Services filed a chapter 11 case in Dallas yesterday and immediately submitted a debt-for-equity reorganization plan that is the culmination of months of pre-bankruptcy negotiations with the institutional debt holders of the highly-leveraged electrical contractor.
This is initial docket of the case, and the Houston Chronicle article on the filing is here. Dan Stewart of Vinson & Elkins’ Dallas office is taking the lead as debtor-in-possession counsel, and Sanford R. Edlein of Glass & Associates, Inc. is the company’s chief restructuring officer. The Creditors Committee has already been appointed and is comprised of institutional debt holders Tontine Capital Partners, L.P., Southpoint Capital Advisors, L.P., and Fidelity Management & Research Co., which were represented in pre-bankruptcy negotations by Marcia Goldstein of Weil, Gotshal & Manges’ New York office. The IES case has been assigned to the Bankruptcy Judge who has the best nickname of any judge in the United States Judiciary, Judge Harlin “Cooter” Hale.
IES is a roll-up that was incorporated in 1997 and, since that time, has used debt to finance an expansion of its operations through the acquisition of other electrical contracting companies. As of the most recent fiscal year, the company had revenues of a little over a billion and employed around 8,900 employees in 140 locations around the world. IES had a net loss of about $129.5 million for last year ($3.31 per share), which followed a net loss of almost $125 million for the previous fiscal year. The bankruptcy filing has been widely-anticipated since mid-December when the company announced that it was contemplating a chapter 11 case with a prepackaged reorganization plan. The NYSE suspended trading of IES stock at that time.
The IES plan is essentially to clean up its balance sheet by swapping around $175 million of its approximate $225 million in senior subordinated debt for an 82% equity stake in the reorganized company. Holders of existing stock in the company will be diluted to 15% of the reorganized company and management and employees will receive 3%. Meanwhile, Bank of America is stepping up to provide about $80 million in debtor-in-possession financing during the chapter 11 case, which IES hopes to conclude on a fast track by mid-to-late April of this year.

In this TCS Daily op-ed, the inimitable Professor Bainbridge takes up the lawsuit filed in Washington last week in which an activist think tank asserts that that the Sarbones-Oxley Act’s Public Company Accounting Oversight Board (nicknamed the “Peekaboo board”) is unconstitutional. The think tank’s lawsuit is based on this John Berlau/Hans Bader white paper for the Competitive Enterprise Institute that analyzes the consititutional issues arising from the Peekaboo board’s creation.
The core assertion in the lawsuit is that the Peekaboo board is vested with extensive governmental functions and powers, including the quasi-law enforcement investigatory power and a quasi-judicial power to impose substantial fines for violations of its rules. Inasmuch as the members of the Peekaboo board are appointed by the SEC rather than the President, the lawsuit contends that SOX’s provision providing for creation of the Peekaboo board violates, inter alia, the appointments clause of the U.S. Constitution. Moreover, since SOX lacks a severability clause, the potential defect in a part of the Act may mean that the entire Act must be declared unconstitutional.
Professor Bainbridge thinks that the lawsuit has legs:

There is also little oversight [of the Peekaboo board]. The only way the SEC can undo any of the [Peekaboo board’s] regulations is by proving that the rules are obviously inconsistent with the Sarbanes-Oxley statute — a nearly impossible task given its vague wording. The [Peekaboo board] is even largely independent of Congressional oversight because its budget is financed from the fees it levies on the companies it regulates. The Justice Department may well argue in response that the Board simply doesn’t rise to the level of a “real” agency. But that will surprise corporate America, given that the Peekaboo can fine accounting firms up to $2 million and individual accountants up to $100,000 for violations.
And, of course, familiar principles of agency capture by the industries it regulates suggest that interest group pressures and favoritism are potentially serious problems.

Read the entire piece, along with this analysis of the lawsuit by Constitutional scholar and Bainbridge colleague, Eugene Volokh.
As Professor Ribstein has long maintained, SOX is more than just a bad law:

SOX wasn’t just a bad law, but a uniquely bad law, passed under uniquely bad conditions without any of the safeguards that normally accompany major legislation.
And even if repeal or drastic shrinkage is impossible, it’s still necessary to make the case as a warning against future SOX’s. One way to do that is to establish SOX as a paradigm of bad law. In other words, to make Sarbanes and Oxley the Edsel Fords of corporate governance regulation.