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Colorado Securities Board will seek its own counsel to investigate quick hiring of new securities commissioner

The Colorado Attorney General’s office says DORA didn’t have to post the job opening since Chris Myklebust previously served in different, but similar roles -- a common hiring process among state agencies

Deputy Attorney General Christopher Beall responds to questions during the state Securities Board special meeting on August 30, 2019. Beall represented the Colorado Department of Regulatory Agencies. (Tamara Chuang, The Colorado Sun.
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At a special Colorado Securities Board meeting held Friday on whether Securities Commissioner Chris Myklebust was hired legally, the board voted to employ its own lawyer independent from its current counsel: the state Attorney General’s Office, which maintained Myklebust’s hiring was legal even though the job was not publicly posted.

Some members of the board have been asking questions since learning Myklebust was quickly hired following the retirement of his predecessor, Gerald Rome. But after learning of conflicting laws and statutes that had the AG’s office backing the regulatory agency’s fast hire, the board moved to investigate the process. 

Myklebust, who did not attend Friday’s meeting, was hired by the executive director of the Department of Regulatory Agencies in 19 days, compared with six to nine months it took for prior commissioners, who testified Friday.

Kent Lund, a member of the state Securities Board, questions how the new Securities Commissioner Chris Myklebust was hired in 19 days with no job posting or time to interview other candidates. Lund and fellow board members called for a special meeting to discuss the issue on August 30, 2019. (Tamara Chuang, The Colorado Sun)

But some members of the board were shocked when their lawyer said Myklebust’s hire was legal because he’d served in similar positions in the past — even if those jobs had nothing to do with securities regulation or protecting investors. Technically, it’s called a “reinstatement” because he held similar types of roles in the past as a division commissioner, said Deputy Attorney General Christopher Beall.

“That mechanism has been used throughout state government and it’s never been questioned. It is at least our view that the use of reinstatement is not in conflict with the Constitution,” Beall said, citing State Personnel Board rule 4-14. “… Someone who has been reinstated has already been compared for purposes of employment into the classification that that person is being reinstated into. There was comparative analysis.”

In other words, if someone had already been vetted and hired for a job at DORA, that person could be reinstated to a similar role at the Department of Public Safety if she or he is qualified according to the job description, Beall explained. “The definition of reinstatement does not require that it be into the same position,” he said.

To which board member Steven Price replied: “The idea that there’s already comparative analysis  performed for a position that is not the one they’re hired into just seems illogical, at best.”

“It may seem illogical, I’ll grant you that, but it happens,” Beall responded. “Reinstatement occurs between departments.”

Chris Myklebust, Colorado Securities Commissioner (Provided by Colorado Department of Regulatory Agencies)

Beall also said the candidate had to be qualified for the position based on the job description. Since no job opening was posted for Myklebust, DORA shared the job opening posted when Rome was hired.

The minimum qualifications, according to the notice, required a college graduate with a bachelor’s degree in accounting, business administration, economics, finance, management or a closely related field. It also required six years of professional senior-level management experience in the securities industry. 

Myklebust had previously served as the state’s banking commissioner and the state’s commissioner of financial services — both divisions are within DORA. 

But when he accepted the job as the new Securities Commissioner in November, the sudden hire was immediately questioned by lawyers in the securities community. If the hiring wasn’t legitimate, they feared any actions he took could be reversed.

“I am very concerned in the litigation side of things,” testified Herrick Lidstone, a lawyer with Burns Figa & Will PC who has previously served on the securities board. “I see those arguments that anything that an improperly appointed commissioner does is voidable … And again, that has absolutely nothing to do with who that person is. That person could be the most intelligent securities person in the world or that person could be the least competent person in the world. But the problem is, it’s an appointment process and whether or not any actions that person may make are valid.”

MORE: Colorado’s top securities regulator was hired in 19 days. Board members push for investigation of the quick pick.

Part of the issue is that the person who hired Myklebust — DORA executive director Marguerite Salazar — left a month later to become the top regulator in New Mexico. Before she left, board member Tom Kenning said he reached out to her to ask about the fast hire and she confirmed that it was done appropriately. 

But another board member Kent Lund loudly disagreed. He made a motion for the board to ask DORA to move Myklebust to an acting-Commissioner role until this was sorted out, but the board decided to meet with new counsel first before deciding.

“I’m really worried about this. I’m really concerned about this. And Tom, I appreciate you calling Marguerite Salazar and she said she did everything by the numbers. It doesn’t look that way,” Lund said during the meeting. “…Nobody’s rushing to judgement here. When we came in to the December meeting, we very politely asked, ‘What the heck happened here?’ … It looks like a patronage midnight appointment.” 


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