The plaintiffs raised both procedural and structural challenges to the Board and its enforcement program. The procedural challenges included that the Seventh Amendment entitled them to a jury trial and three due process claims: (a) the Board unconstitutionally combines investigative, prosecutorial, and adjudicative functions; (b) its prior settlements with plaintiffs’ former employers prejudged their cases; and (c) the Board relies on nonpublic decisions that its staff can see but respondents cannot.

The plaintiffs’ structural claims included that: (a) Board’s hearing officers were not validly appointed and are shielded from presidential removal, in violation of Article II; (b) the Board exercises government power without adequate supervision; and (c) its fee-based funding unconstitutionally delegates Congress’s taxing power.

The case has been closely watched because it was the first major test of whether the Supreme Court’s decision in SEC v. Jarkesy¹—which held that when the SEC seeks civil penalties for securities fraud, the defendant has a Seventh Amendment right to a jury trial in federal court—also applies to PCAOB enforcement proceedings. The district court’s decision in Doe does not answer that question. Instead, it held that respondents must raise their jury-trial claims through the PCAOB, then the SEC, and then a federal court of appeals, and that plaintiffs have not yet suffered any jury-trial related injury because they had not yet been sanctioned for any alleged misconduct.

The decision also rejected, on the merits, the plaintiffs’ challenges to the Board’s structure. The plaintiffs are likely to appeal to the D.C. Circuit, and that appeal will turn first on jurisdiction rather than Jarkesy. Unless the circuit court reverses, the Jarkesy question will likely reach a court only after a PCAOB administrative proceeding has run its course. The current vacancy in the Chief Hearing Officer role raises the question of whether and when the current PCAOB intends to restart disciplinary proceedings against these plaintiffs or other respondents.

In this alert, we discuss (1) the background of the PCAOB’s structure and the enforcement proceedings at issue; (2) the court’s analysis of each constitutional challenge; and (3) the practical implications of this decision for auditors, audit firms, and post-Jarkesy litigation strategy—including the intersection of this ruling with recent developments at the SEC and the current vacancy in the PCAOB’s Chief Hearing Officer position.

The Structure of PCAOB Disciplinary Process

Congress created the PCAOB in 2002 to regulate the audits of public companies. Although the Sarbanes-Oxley Act created the Board as a non-profit corporation, the Supreme Court has treated it as a government entity for constitutional purposes. The SEC exercises pervasive oversight over the Board: it appoints the Board’s five members, approves the Board’s budget and rules, and may review enforcement disciplinary matters de novo.

PCAOB enforcement investigations proceed through several stages. The Division of Enforcement and Investigations (“DEI”) may open an informal inquiry, which typically involves voluntary cooperation. The Board may then issue an order of formal investigation to which noncooperation is sanctionable.

DEI may then recommend, on an ex parte basis, that the Board institute a disciplinary proceeding against a respondent, who has the right to submit a written statement to the Board. If the Board institutes a proceeding, it can appoint a hearing officer, who is appointed and is removable by the Board with SEC approval, to adjudicate the disciplinary proceeding. Under SOX, available sanctions include censure, temporary or permanent suspension, associational bars, and civil money penalties. The hearing officer’s initial decision is presumptively confidential; de novo Board review follows, then SEC review, and finally judicial review in the court of appeals. Sanctions are stayed pending SEC review. If a respondent prevails in a disciplinary proceeding at the Board level, the decision remains confidential.

The Plaintiffs’ Proceedings and Procedural History

The Board instituted separate disciplinary proceedings against each Doe plaintiff. In both cases, the Board had issued settled disciplinary orders against their former firms, which were not binding on the Doe plaintiffs. Both plaintiffs filed suit to enjoin the disciplinary proceedings on numerous grounds: the Seventh Amendment right to a jury trial, due process, the Appointments Clause, removal protections, the private nondelegation doctrine, and the Appropriations and Taxing Clauses. The Board stayed its disciplinary proceedings during the pendency of this case, during which the Board’s only Hearing Officer retired.

The Court’s Decision

The court rejected all of the plaintiffs’ argument, holding that: “These challenges take circuitous routes but reach the same destination. Plaintiffs must return to the Board.”²

Seventh Amendment and Jarkesy

The court did not rule on the merits of the plaintiffs’ Seventh Amendment claims, but ruled that it lacked subject-matter jurisdiction. Applying the Thunder Basin factors, the court found that Congress intended such challenges to be raised through the Board’s administrative process, with SEC review and then judicial review in the court of appeals.³

The court addressed each of the three Thunder Basin factors. First, the appellate path set forth in SOX for a disciplinary sanction, i.e., through the PCAOB, SEC, and court of appeals, provided a “meaningful” avenue for judicial review. The court dismissed the plaintiffs’ argument that meaningful review was illusory because only eight of more than 500 Board final sanctions orders had been appealed to and decided on the merits by the SEC. The court pointed to the pathway of Jarkesy: the respondent in that case was directed to proceed through the agency, did so, and ultimately prevailed at the Supreme Court.

Second, the court found the claims were not “wholly collateral” to the administrative proceedings because the jury-trial right depends on the remedy ultimately imposed—a question the agency process “might fully dispose” of if no sanctions, or only equitable sanctions, are ordered. Third, the court acknowledged this factor was a closer call but, that held that the matter did not wholly fall outside of the Board’s expertise because it presented a “mixed question” of law and fact to which the Board’s expertise in its own disciplinary proceedings was relevant.

The court then held Axon Capital’s jurisdictional exception⁴ for structural challenges did not give the court jurisdiction over the Seventh Amendment claim. The court held that the claim was not structural, but remedy-dependent such that the claim depends on the outcome of the very proceedings the plaintiffs sought to enjoin. Any Seventh Amendment injury would arise only if the hearing officer, the Board, and the SEC each resolved the proceedings in a particular way—imposing civil money penalties at every level of review.

Due Process

The court rejected due process challenges to the PCAOB’s combined investigative and adjudicative functions. The court found that the combination of prosecutorial and adjudicative functions in the Board does not, without more, violate due process. The court found that ex parte communications between DEI and the Board during the investigation phase—before the institution of formal proceedings—did not suggest that the Board was inherently biased in violation of due process. The court also held that the hearing officer’s position as a Board employee likewise did not make him inherently biased.

The court also rejected plaintiff’s argument that the Board’s prior disciplinary orders against the plaintiffs’ firms prejudged the Board against them in violation of due process. Again, the court found that it lacked jurisdiction and, in any event, held that there is “nothing unconstitutional about the Commission finding a fact in one proceeding and . . . again in a second.”⁵

The court also found it did not have jurisdiction over plaintiffs’ claims that the confidential nature of past PCAOB disciplinary proceedings violated their due process rights. The court held that this challenge was a procedural challenge that needed to proceed through the Board’s process, the SEC’s review process, and the federal court of appeals, and that it was not a structural constitutional claim that the court could adjudicate.

Other Claims

The court rejected plaintiffs’ claims that the Board’s hearing officer was unconstitutionally appointed and had unconstitutional removal protection. The court held that the hearing officer was appropriately appointed by the Board with SEC approval, finding that an inferior officer may appoint another inferior officer so long as the Head of Department approves.

The court found that the PCAOB’s post-Trump v. Slaughter⁶ removal framework is constitutionally adequate: the hearing officer is removable at will by a Board majority with SEC approval; the SEC can remove holdout Board members; and the president can remove the SEC and Board members.

The court also rejected the contention that the PCAOB is a private entity to which Congress unconstitutionally delegated government power. Applying Lebron v. National Railroad Passenger Corp.,⁷ the court concluded that private-nondelegation doctrine did not apply because the Board is a government entity—not “a private Willy Wonka chocolate factory.”⁸ Even if the private nondelegation doctrine applied, the court found that the SEC retains sufficient “authority and surveillance” over the Board.⁹

Finally, the court upheld the PCAOB’s funding mechanism—the accounting support fee authorized by SOX—against Appropriations Clause and Taxing Clause challenges. The court held that Congress supplied an intelligible principle for the Board, with SEC approval, to set the accounting support fee.

What’s Next for PCAOB Enforcement

Although the court’s decision was a big win for the PCAOB and its enforcement program, questions still remain concerning what claims and sanctions the PCAOB can bring against respondents. And given the current state of PCAOB enforcement, it remains to be seen if the Board is interested in resuming the disciplinary proceedings against the Doe plaintiffs or instituting disciplinary proceedings more generally.

Because the court did not reach the merits of plaintiffs’ Seventh Amendment claims, the issue of whether Jarkesy requires a jury trial for certain PCAOB claims or sanctions will continue to affect PCAOB enforcement for the foreseeable future. To date, no court has ruled on the threshold Jarkesy question in the PCAOB context. Because PCAOB proceedings remain confidential, it remains unknown whether a hearing officer or the Board itself has ruled on Jarkesy’s application to any PCAOB claim or sanction.

Until the issue has been decided on its merits, every respondent should continue to raise Seventh Amendment claims through the PCAOB in-house disciplinary process. Because Jarkesy may preclude the PCAOB from levying civil money penalties and possibly associational bars, respondents should continue to challenge DEI attempts to obtain such sanctions, including in connection with any possible settlement.

The lingering Jarkesy questions, along with changes in the Board and Board staff, appear to have significantly impacted the PCAOB’s recent enforcement program. Indeed, in the more than seventh months since the current Board Chair, Demetrios Logothetis, was sworn in on February 10, 2026, the Board has issued only five settled disciplinary proceedings, imposing a total of only $535,000 in penalties, and barring only two auditors from associating with a registered firm.¹⁰ Conversely, in the same time period, it has allowed four previously-barred auditors to re-associate with registered firms.

Whether the Board decides to restart the disciplinary proceedings against the Doe plaintiffs or begin other disciplinary proceedings remains an open question. First, it is not clear when the Board will have a hearing officer to adjudicate such claims. As the court made clear, the hearing officer position has been vacant since 2025; the Board’s job posting for the position remains on its website.

Further, the Board has not issued a single adjudicated disciplinary decision since June 2025. In that order, the Board did not impose a civil penalty against the respondent, potentially in light of Jarkesy concerns. However, the Board, unlike in prior cases where it issued a notice of finality of a hearing officer’s initial decision, did not make public the hearing officer’s decision, so the question of whether Jarkesy influenced the lack of a civil money penalty remains confidential.

The SEC has one public, open administrative proceeding of an appeal from a PCAOB disciplinary proceeding.¹¹ That matter has been pending with the SEC since January 2024, but SEC recently extended its time to issue a decision until December 7, 2026. While Seventh Amendment issues are not directly raised in the respondents’ petition for review, the Commission could shed light on its position as to whether Jarkesy impacts PCAOB claims and sanctions in its decision.

The Doe court’s decision to punt on jurisdictional grounds the question of whether the confidential nature of PCAOB adjudications raises due process concerns likewise raises further complications for future PCAOB enforcement proceedings. Because respondents are unable to identify whether and how the Board or a hearing officer has previously interpreted Jareksy claims, other constitutional issues, or merits claims, they should continue to affirmatively seek disclosure from the Board—even if such requests have historically been denied—to preserve the issue for appellate review and to create a record of the informational asymmetry.

Further, whether the Doe ruling emboldens DEI and the Board to increase enforcement activity must be considered along with the SEC’s announcement of its new Financial Reporting and Accounting Unit within its enforcement division. Whether the SEC intends to bring more auditor misconduct cases and how the new group’s mandate impacts PCAOB enforcement remains an open question. But the steep downturn in PCAOB enforcement activity, the shrinking of DEI’s staff and enforcement budget, and the SEC’s own retreat from litigated administrative proceedings post-Jarkesy—suggests that the practical enforcement risk for auditors may remain lower in the near term than the Doe court’s jurisdictional holdings might imply.

Some Key Takeaways for Auditors

• Exhaust administrative remedies. Seventh Amendment and other constitutional challenges to PCAOB enforcement must be raised and preserved through the Board–SEC–court of appeals review path. Direct district court challenges are likely to be dismissed for lack of jurisdiction.
• Focus on remedy. The viability of a jury-trial claim under Jarkesy may depend on whether the Board seeks civil money penalties or other potential legal remedies. Respondents should advocate early regarding the appropriate remedy and, where appropriate, consider settlements without any such sanctions.
• Use Rule 5109(d) strategically. Written statements to the Board before institution of proceedings are a critical advocacy tool that can help convince new DEI staff and the new Board to dismiss or pare back proposed disciplinary recommendations.
• Request prior decisions. The PCAOB’s confidential adjudicative decisions are not publicly available, but respondents should request disclosure to preserve due process arguments and address informational asymmetry.
• Monitor the appeal. The likely D.C. Circuit review of Doe may refine the jurisdictional and merits analysis. Respondents with pending or anticipated proceedings should track this appeal and the developing post-Jarkesy case law closely.