SEC’s Gallagher, Aguilar to Depart as Agency Crafts Fiduciary ‘Term Sheet’

While the impending departures of Daniel Gallagher and Luis Aguilar, two commissioners at the Securities and Exchange Commission, will not hinder progress on the agency’s fiduciary rulemaking, the two commissioners are planning to exit as the agency drafts a term sheet on what such a rule should look like.

Aguilar, a Democrat, has served as a commissioner for seven years, while Bloomberg recently reported that Gallagher, a Republican, who was sworn in as a commissioner in 2011, is resigning his post after four years.

Gallagher’s five-year term was set to expire in 2016. A spokesperson for Gallagher’s office said that he is not commenting on the news reports of his planned departure.

Bloomberg reported that Gallagher, 42, plans to remain on the five-member commission until a successor is confirmed—a process that could take months.

Aguilar’s term expires on June 5. A spokesperson in Aguilar’s office said that while Aguilar “has indicated that he’s not seeking another term, he has no current plans to leave.”

Both potential departures come as the agency drafts a “term sheet” on its uniform fiduciary rule for brokers and advisors, according to David Tittsworth, the former president and CEO of the Investment Adviser Association, who starts his new position at Ropes & Gray on June 1.

“Much work,” however, remains on the term sheet before it’s ready for SEC action, Tittsworth said.

While Aguilar, 61, and Gallagher’s departures later this year will certainly change “the composition” of the SEC, Tittsworth said, “in the near term, it seems unlikely that Commissioner Gallagher’s unexpected resignation and the end of Commissioner Aguilar’s term next month ‎will change the calculus of a fiduciary rulemaking” under Section 913 of the Dodd-Frank Act. 

That being said, any votes on such a fiduciary rulemaking will not occur until after their replacements are in place, he added.