Daniel M. Gallagher will take a pay cut of more than $1 million a year if the Senate confirms him for a spot on the U.S. Securities and Exchange Commission.
The securities lawyer and former SEC deputy division director is one of President Barack Obama’s two commission nominees facing a confirmation hearing tomorrow before the Senate Banking Committee. Gallagher’s financial disclosures show he was paid about $1.2 million a year advising SEC-regulated firms. If confirmed, his salary will be $155,500, according to the U.S. Office of Personnel Management.
Lawmakers will consider Gallagher, 39, who is a partner at Wilmer Cutler Pickering Hale & Dorr LLP, and incumbent Commissioner Luis Aguilar, 57, a Democrat nominated for a second term. Gallagher would replace fellow Republican Kathleen Casey, whose five-year term expired last week. Casey is permitted to keep serving on the five-member commission until replaced, as Aguilar has done since his term ended more than a year ago.
Since leaving the SEC’s trading and markets division in early 2010, Gallagher consulted for Bank of America Corp., Deutsche Bank AG and General Electric Co., the disclosures show. He has also worked with accounting firm PricewaterhouseCoopers LLP; NYSE Euronext; Goldman Sachs Group Inc. unit Spear Leeds & Kellogg Specialists LLC; and private investment firms including Citadel LLC, DE Shaw & Co. and Elliott Associates LP.
Almost all of the companies he advised are regulated by the commission Gallagher may soon join. He declined to comment on the details of his financial disclosures.
Patrick McGurn, executive vice president at Rockville, Maryland-based Institutional Shareholder Services, said there has been an “evolution” in the SEC appointment process, with nominees “closer to the beginning of their career than the end of it,” rather than those capping careers with public service. “I think it has raised the question about people using the position as a stepping stone,” McGurn said.
Gallagher would join Commissioner Troy Paredes, a Republican who was 37 when confirmed in 2008, Commissioner Elisse Walter, a Democrat, and Chairman Mary Schapiro, an independent.
Aguilar has investments in 36 accounts and mutual funds, according to his disclosures, with the highest individual holding between $1 million and $5 million in a Vanguard Prime Money Market Fund. The former securities lawyer also owns stakes in International Business Machines Corp., Johnson & Johnson, Coca-Cola Co., Merck & Co. and Procter & Gamble Co., the documents show.
Aguilar, who declined to comment before the hearing, enters the confirmation process with at least one ally on the Senate panel, Robert Menendez of New Jersey.
“His leadership has been key in corporate governance reforms and in reinvigorating SEC enforcement,” Menendez, a Democrat, said of Aguilar in a September endorsement letter to the president. It also praised Aguilar’s support for a fiduciary standard for brokers.
The Banking Committee also is set to consider the nominations of Anthony Frank D’Agostino and Gregory Karawan to be directors of the Securities Investor Protection Corp.
The confirmation process has drawn criticism this year from those frustrated with procedural roadblocks, including Treasury Secretary Timothy F. Geithner. He said at last week’s International Monetary Conference that political abuses of the confirmation process are “undermining the core elements of reform,” with Dodd-Frank Act opponents blocking appointments of financial regulators.
The day of Geithner’s June 6 speech, Nobel laureate Peter Diamond withdrew as Obama’s nominee to the Federal Reserve’s board of governors, citing Republican opposition over 14 months.