The Securities and Exchange Commission is reportedly investigating former Public Company Accounting Oversight Board chairman, William Duhnke, over his handling of internal complaints. Whistleblowers have alleged that Duhnke created “a sense of fear” and intimidation within the agency, according to reports. The former chairman also came under fire during his tenure for allegedly using racist remarks towards an employee of Chinese ethnicity regarding the coronavirus.
It is unclear how the SEC could punish Duhnke since he has already been removed from the position. Appointed in December 2017, his stint was characterized by a hostile work environment and retaliatory actions against employees he disagreed with, according to whistleblowers from current and former PCAOB employees, the Wall Street Journal reported.
Duhnke said in a written statement that, “every single allegation of wrongdoing that has been made against me is false. It’s obvious that certain individuals have abused their positions of authority by orchestrating a well-coordinated smear campaign.” He said he has admittedly upset some employees in the past by making what he claims were long-overdue changes to the organization.
Gary Gensler, the new SEC chair tapped by President Biden, said that he expelled Duhnke because the watchdog agency had not been adequately fulfilling its mission of “auditing the auditors.” Whistleblowers have also alleged that Duhnke politicized his role by firing senior staff and retrenching areas of the regulator’s work with the goal of shutting it down.
Stormy Seas at the PCAOB
The SEC probe is the second major review of the PCAOB in two years. It follows a turbulent period for the regulator, including a scandal in which auditors working for accounting firm KPMG cheated on its exams, shake-ups of its board, the abrupt exits of many senior staff, and allegations of racial discrimination.
The PCAOB has called upon law firm Sullivan & Cromwell to explore the retaliation allegations and handle the SEC’s ongoing enforcement investigation, while also hiring law firm Covington & Burling to investigate claims of racist remarks made by Duhnke to Sue Lee, a former PCAOB chief risk officer. Lee filed a lawsuit against Duhnke and the PCAOB earlier this year on the grounds of unlawful termination, to which she was promptly countersued.
No definitive findings of misconduct by Duhnke have been revealed to date, as the investigation is still ongoing. 