This license requires the holder to uphold code of professional ethics, and makes the engineer themselves be personally responsible for the safety and viability of the design itself. Losing a PE license is rare, but it does happen. The industry board (usually a regional board) can also discipline/reprimand engineers who fail to meet the professional standard - rubber stamping projects, personal misconduct, etc. Losing a license is a huge deal, but even reprimands can have a serious negative impact on someone's career.
In the industry the previous commenter works in their hypothetical would absolutely meet the bar for discipline or reprimand.