Colorado Securities Commission Chris Myklebust is stepping down after board members and local attorneys questioned the validity of his appointment by an outgoing regulator, according to an email sent to board members Thursday.
Myklebust will leave the post on Sept. 20, Patty Salazar, the current executive director of the Department of Regulatory Agencies, said in an email. She said Myklebust offered to quit in order to help preserve public trust.
“Some have questioned the validity of Mr. Myklebust’s appointment in 2018 by DORA’s former executive director during the prior administration,” Salazar said in the email. “However, the Colorado Department of Law has stated that the appointment was appropriately made under the authority of the previous executive director and did comply with state law. Nonetheless, the process exercised and selection made by my predecessor continues to be the subject of recurring public scrutiny, creating distractions and inhibiting the division from focusing on its core mission.”
Members of the state’s Securities Board were taken aback last November when they learned of Myklebust’s sudden appointment as commissioner. The Colorado Sun was the first to report the questions about Myklebust’s hiring.
Within 19 days of former Commissioner Gerald Rome giving notice, then-DORA executive director Marguerite Salazar offered Myklebust the job. A month later, she left to become the top regulator in New Mexico. The board was not consulted.
Marguerite Salazar is unrelated to current DORA director Patty Salazar.
Myklebust had previously served as the state’s banking commissioner and the state’s commissioner of financial services — both divisions are within DORA.
But some board members and local securities attorneys questioned his qualifications since the past roles had little to do with securities regulation or protecting investors. No job opening was posted and no other candidates competed for the top role.
There was also a concern that if the hiring was later deemed inappropriate, it could invalidate any cases Myklebust oversaw.
“I am very concerned in the litigation side of things,” said Herrick Lidstone, a lawyer with Burns Figa & Will PC who attended the board’s special meeting last week. “I see those arguments that anything that an improperly appointed commissioner does is voidable.”
Under state law, DORA’s executive director has the authority to appoint a new commissioner. Then-director Marguerite Salazar used a “reinstatement” because he held similar types of roles in the past as a division commissioner, said Deputy Attorney General Christopher Beall, who attended the past several board meetings to speak on behalf of the state and DORA.
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 at the last meeting. “The definition of reinstatement does not require that it be into the same position,” he said.
To which board member Steven Price replied at the meeting: “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.”
In her email, DORA’s current director Patty Salazar said she will move forward to find his replacement in a “thoughtful and thorough process to examine best practices, including engagement with the Securities Board, interested members of the securities industry, as well as other stakeholders.”
Updated Sept. 7, 2019 to say that the two Salazars are not related.
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