Accountant Sues PCAOB, Claims Disciplinary Proceedings Unconstitutional

On January 19, 2023, an anonymous accountant filed a lawsuit against the Public Company Accounting Oversight Board, alleging its disciplinary power was unconstitutionally established by the Sarbanes-Oxley Act of 2002.  According to the accountant, the PCAOB initiated a disciplinary proceeding against him in December 2022 after several years of investigation.  Through this lawsuit, the accountant is seeking an injunction preventing the PCAOB from continuing with that disciplinary proceeding.

As a basis for the injunction he seeks, the accountant alleges that the PCAOB’s disciplinary proceeding is unconstitutional because 1) it can levy serious punishments, but was established as a non-governmental entity and is not subject to ordinary checks and balances or transparency requirements; 2) it is funded by money raised through accounting support fees rather than from congressional appropriations; 3) its regulatory powers are not checked by any presidentially-appointed officers; 4) the disciplinary hearing officers are not constitutionally appointed; and 5) it serves as both prosecutor and judge of the disciplinary hearings, and the accused-parties are not entitled to trial by jury.  The PCAOB’s response to the complaint is not yet due.

WBK has previously covered similar constitutional challenges against other regulators and government entities, such as the FDIC, CFPB, SEC, and FHFA.