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PCAOB faces constitutional showdown after Jarkesy

10/1/25

By: William R. Covino and Nancy M. Reimer

When the Supreme Court decided Sec. & Exch. Comm’n v. Jarkesy, 603 U.S. 109 (2024) last summer—holding that the SEC could not impose civil penalties without giving respondents the option of defending themselves before a jury in federal court—we predicted Jarkesy’s analysis would be invoked by practitioners in defending enforcement actions brought by other agencies. We were right. The Public Company Accounting Oversight Board (“PCAOB”) is now in the spotlight.

In John Doe v. PCAOB, No. 1:24-cv-780-ACR (D.D.C.), the New Civil Liberties Alliance has moved for summary judgment, arguing PCAOB’s enforcement regime is unconstitutional. The parallels to Jarkesy are unmistakable. PCAOB staff investigate and prosecute, PCAOB-employed hearing officers adjudicate, appeals go to the SEC—and juries never enter the picture. However, the Board wields the power to impose hundreds of thousands of dollars in penalties and suspend auditors or firms from practice—sanctions that can cripple or even destroy careers and businesses—all without the involvement of a jury or an Article III judge.

The Supreme Court’s Jarkesy decision found that when agencies like the SEC seek to impose civil penalties for conduct akin to common law fraud, the Constitution affords respondents the right to a jury trial in federal court. The Court rejected the argument that such cases fall under the “public rights” exception, emphasizing that punitive sanctions affecting private rights must be triable before a jury. The NCLA’s challenge to the PCAOB builds on this reasoning, arguing that the Board’s in-house proceedings—where private actors act as prosecutor, judge and jury—violate not only the Seventh Amendment, but also due process and separation of powers principles.

The timing of this motion only heightens the uncertainty. In a separate PCAOB matter where we serve as counsel, oral arguments on similar issues, including Jarkesy were just pushed, sua sponte for a second time, from November 2025 to May 2026. Whether coincidence or not, the delay underscores how unsettled these constitutional questions are and highlights the ripple effects Jarkesy is already sending through other enforcement regimes.

This motion is a strong step in challenging the PCAOB’s constitutional authority, but it will still be some time before the courts bring clarity. One way or another, a decision must be made—and its consequences will reach far beyond this single case.

For now, a few takeaways emerge. Constitutional challenges to PCAOB’s enforcement are here and they will shape how these proceedings are defended. Accounting firms and counsel are well advised to track these developments closely and to preserve the right to a jury trial whenever possible to avoid an inadvertent waiver.

For more information on this topic, please contact Will Covino at william.covino@fmglaw.com, Nancy Reimer at nancy.reimer@fmglaw.com or your local FMG relationship partner.

Information conveyed herein should not be construed as legal advice or represent any specific or binding policy or procedure of any organization. Information provided is for educational purposes only. These materials are written in a general format and not intended to be advice applicable to any specific circumstance. Legal opinions may vary when based on subtle factual distinctions. All rights reserved. No part of this presentation may be reproduced, published or posted without the written permission of Freeman Mathis & Gary, LLP.