This hybrid public/private structure led to a high-profile lawsuit challenging the PCAOB as
unconstitutionally invading the sphere of the executive branch (Free Enterprise Fund et al. v.
Public Company Accounting Oversight Board et al.). In 2010, the U.S. Supreme Court largely
upheld the agency’s design and structure, striking down only a provision of the Act that limited
removal of PCAOB directors to situations of misbehavior (‘‘for cause’’), increasing the theoretical
power of the SEC over the PCAOB. A broader effort to overturn SOX altogether in the same
lawsuit was turned back, however, and PCAOB is now a durable part of the regulatory landscape,
largely intact despite frequent political attacks on SOX itself.2 PCAOB has a staff of over 600 and
an annual budget of $180 million. Its budget has grown significantly since 2002, both absolutely
and relative to benchmarks such as the SEC’s budget—PCAOB’s budget is now roughly one sixth
of the SEC’s budget, as illustrated in Figure 1, Panel A. By contrast, while the SEC received a large
boost in its own budget in 2003, partly as a result of SOX, its budget has grown more slowly,
roughly one-third the PCAOB growth rate since 2003 (see Figure 1, Panel B).