New PCAOB Chair Closely Linked to Sen. Shelby

As he was enjoying widespread praise for his opposition to Roy Moore’s candidacy for the U.S. Senate from Alabama, Richard Shelby, the state’s senior senator, issued a statement earlier this week praising the appointment of William D. Duhnke III as chairman of the Public Company Accounting Oversight Board. In doing so, the powerful Republican senator was spotlighting a man who had served under him for two decades.

Currently staff director and general counsel to the U.S. Senate rules committee, which is chaired by Shelby, Duhnke previously served in those slots on the Shelby-led Senate banking and appropriations committees.

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“Securities and Exchange Commission Chairman Jay Clayton has made an excellent choice in selecting Bill Duhnke to be the next chairman of the PCAOB,” Shelby said.

“His intellect and experience ensure his future success in this role. I have relied on Bill’s professional advice and leadership for 20 years, and I know he will be an asset as the board works to improve audit quality and promote public trust,” he added.

In replacing outgoing PCAOB Chairman James Doty with Duhnke and installing four new members of the reputedly well-paid audit oversight group, Clayton seemed to be aligning with President Trump’s proclivity for ousting Obama-era regulators and advancing an anti-regulatory agenda. Doty had reportedly sought a second term, for which he was eligible, but wasn’t picked.

Sen. Richard Shelby

Appointed in 2011, Doty has long been under fire for what his opponents saw as regulatory foot-dragging at the board and increased compliance costs and for the stringent approach the PCAOB took in its investigations of audit firms. As a securities lawyer for Baker Botts, Doty represented the PCAOB in its successful 2010 defense in Free Enterprise Fund v. PCAOB, a U.S. Supreme Court challenge to the constitutionality of the PCAOB.

For his part, Shelby has been a staunch opponent of what he sees as excessive financial regulation, especially the Dodd-Frank Law.

Besides Duhnke, Clayton’s other appointees to the board are:

• J. Robert Brown, a University of Denver law professor who has also spent considerable time advising overseas governments, particularly in the former Soviet Union.
• Kathleen M. Hamm, a former official at the U.S. Department of the Treasury and the SEC. She is currently a fintech and cyber solutions executive at Promontory Financial Group, an IBM company.
• James G. Kaiser, a  PricewaterhouseCoopers partner whose appointment represents the first time an auditor has joined the PCAOB from a Big Four accounting firm, according to the Wall Street Journal.
• Duane M. DesParte, who was slated to retire in March as corporate controller of Exelon, where he has worked for the past 14 years. He previously was an audit partner at Deloitte & Touche and Arthur Andersen.

The WSJ noted that this is the first time the SEC has declined to reappoint PCAOB members who were eligible to serve another term, according to Lewis Ferguson, one of the departing PCAOB members. Another departing board member named in the Obama era, Jeanette Franzel, had reportedly sought reappointment.

Duhnke is one of a number of current and former Shelby aides gaining key Trump administration posts. Another is Hester Peirce, a Senate banking committee staffer under Shelby who was nominated in July to become an SEC commissioner.