Statement on the Amendment to PCAOB Rule 2107 Regarding Constructive Requests to Withdraw from Registration

Remarks as prepared for delivery

Thank you, Chair Williams.

On June 12, 2024, I supported the release of the proposal which included two separate PCAOB rules. For example, I supported the proposal to amend existing PCAOB Rule 2107 (“Withdrawal from Registration”) by adding a new subsection (h). I stated that the proposed new subsection (h) is a “good housekeeping” matter by which the Board could deem registered firms that have not fulfilled certain statutory obligations under the Sarbanes-Oxley Act of 2002 to have constructively withdrawn from registration.¹ After reading each of the 18 comment letters we received, I continue to believe that the amendment to PCAOB Rule 2107(h) is a “good housekeeping” matter, and I will support the amendment. I am pleased by the revisions made by PCAOB staff in response to the comment letters. Specifically, the proposal afforded firms 30-days to stop the constructive withdrawal process, but the amendment we are voting on today affords firms a 60-day period based on a comment we received. 

Notwithstanding my support today for this “good housekeeping” rule, I am deeply concerned about the possibility of the PCAOB adopting in the weeks ahead a series of “midnight regulations” that could overwhelm the institutional review process, both here and at the Securities and Exchange Commission, that helps ensure that regulations have been carefully considered, are based on sound evidence, and can justify their costs. Moreover, correspondence from at least one member of a relevant committee of Congress has called on the federal financial regulatory agencies to suspend the proposal or promulgation of any regulations before the end of the current Administration.² Modernizing our standards and rules is important, but if we rush to get things done before any changes in the composition of the Commission, we could end up wasting taxpayer dollars by adopting ill-considered rules and running our professional staff ragged while at the same time undermining the democratic process.

I want to thank Vince Meehan in the Office of the General Counsel and Hanna Lee and Min Ren in the Office of Economic & Risk Analysis, for their hard work and their responsiveness to my questions.

I now have a question for the General Counsel. Mr. Cappoli, where does the adopting release explain why we are not voting today on proposed Rule 2400 and the proposed amendment to Form 3?

I am concerned about the PCAOB’s lack of transparency here. We seem to have little hesitation to propose and/or impose voluminous public disclosure and reporting requirements on firms because it would enhance firm transparency, yet we choose not to be transparent ourselves. As a regulator, it is important for us to walk the talk and not just talk the talk. We owe it to investors and other stakeholders to be more transparent.

Back to you, Chair Williams.