Audit Watchdog's Future At Risk After Supreme Court's SEC Ruling

• Kramer Levin attorneys examine SEC v. Jarkesy impact on PCAOB
• In-house tribunal restrictions may apply to board proceedings

The viability of the Public Company Accounting Oversight Board's enforcement proceedings is in question following the US Supreme Court's decision in SEC v. Jarkesy, because the PCAOB has no statutory authority to bring such proceedings in federal court.

The court held that the Seventh Amendment entitles a defendant to a jury trial when the SEC seeks civil penalties for securities fraud. That means the SEC can't compel the defendant to adjudicate such claims in the agency's in-house tribunals.

Like the SEC, the PCAOB conducts investigations and can bring disciplinary proceedings against registered public accounting firms and associated persons. The PCAOB's purview is limited to alleged violations of the Sarbanes-Oxley Act of 2002, PCAOB rules, professional standards, and securities laws "relating to the preparation and issuance of