Jan 20 (Reuters) – The U.S. accounting watchdog is dealing with a lawsuit over claims the regulator’s strategy of dealing with disciplinary issues behind closed doorways is unconstitutional.
The lawsuit, filed Thursday in federal court docket in Texas by the conservative Washington-based New Civil Liberties Alliance, accuses the Public Firm Accounting Oversight Board (PCAOB) of bringing a “secret prosecution” with out due authorized course of towards an accountant working for a agency in Colombia.
The PCAOB is a non-profit physique lawmakers created within the wake of the Enron-era securities fraud scandals of the early 2000s meant to observe and oversee the audits of public firms to guard buyers and guarantee correct, impartial experiences.
The grievance, which describes the Board’s disciplinary course of as “biased” and “secretive”, marks the newest problem from pro-industry teams difficult federal regulators’ authority. Different lawsuits have taken intention on the constitutionality of the Client Monetary Safety Bureau and of the usage of in-house tribunals in instances introduced by the U.S. Securities and Change Fee.
PCAOB spokesperson Jennifer Donohue declined to remark intimately on the problem, saying solely: “The PCAOB is laser-focused on defending buyers.”
Of their grievance, the New Civil Liberties Alliance, a Washington strain group that opposes what it calls the “unconstitutional administrative state,” claims the PCAOB unfairly focused an unnamed accountant in confidential proceedings, claiming the person did not cooperate with an inspection of an audit associated to a publicly traded firm’s annual monetary statements.
The group additionally claims the PCAOB is unsupervised by duly appointed authorities officers and never topic to significant oversight. The SEC oversees the board and may overview its findings, that are additionally topic to problem in court docket.
PCAOB Chair Erica Williams said in aninterview final 12 months that she would assist legislative modifications that will make the board’s proceedings public, like many different regulators.
Whereas criticizing the secrecy of PCAOB disciplinary proceedings, the lawsuit additionally seeks to keep up the anonymity of plaintiff “John Doe,” citing protections beneath the Sarbanes-Oxley reforms enacted in 2002.
Reporting by Douglas Gillison in Washington and Chris Prentice in New York; Enhancing by Aurora Ellis
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