TheCorporateCounsel.net

Last month, Dave and Meredith shared perspectives on the SEC’s loss in front of SCOTUS in SEC v. Jarkesy, which affects the use of administrative enforcement actions by the SEC and other agencies. A recent challenge to the disciplinary authority of the PCAOB underscores the potentially broad-reaching implications of this decision. Although the PCAOB is “government created,” it operates as an independent regulator rather than as a government agency.

The “New Civil Liberties Alliance” first challenged the PCAOB’s authority in a complaint filed last March in the U.S. District Court for the Middle District of Tennessee. That complaint – John Doe v. PCAOB – was amended last week to add citations to SCOTUS’s Jarkesy opinion and add points stemming from that opinion, such as:

To the extent Congress purported to vest such judicial [disciplinary] power in the Board through Sarbanes-Oxley, that vesting was impermissible under Article III of the Constitution.

The NCLA argues that when it comes to enforcement proceedings alleging a violation of PCAOB rules or federal securities laws, accountants are entitled to a jury trial on the merits in an Article III court. And regardless of whether or not you agree with that argument, the complaint offers a colorful look at how these disciplinary proceedings play out behind the scenes, from the perspective of the suspected wrongdoer. More information about the case is on the NCLA’s website.

– Liz Dunshee