Home Featured Story One-on-One with Securities Counsel Raul Rodriguez

One-on-One with Securities Counsel Raul Rodriguez


The securities industry veteran talks with the Opportunist’s Managing Editor Leslie Stone about his career, the presidential appointments he has held and his thoughts on improving the U.S. economy.

Raul Rodriguez has held presidential appointments in two administrations. In the late-1970s, President Gerald Ford appointed him to the Administrative Conference of the United States. Later, President James Carter appointed him to the post of Inspector General for the Office of Compliance of the Action Agency, supervising VISTA and the Peace Corps. He also served as the Executive Director for the Colorado State Department of Regulatory Agencies under the supervision of then Colorado Governor Richard Lamm. He currently owns and operates a private law practice, Rodriguez & Associates, in Denver, Colo.

Opportunist: Tell us about your area of practice.

Raul: I consider my practice sort of a boutique, primarily in the area of corporate securities practice. I do private placements, registration statements and all of the regulatory documentation required to be filed by public companies, such as Form 10-Ks, 10-Qs, 8-Ks, 3, 4 and 5s and Schedule 13ds, as well as general corporate legal work such as incorporations, mergers, acquisitions and corporate maintenance.

Even though I’m a small firm I have relationships with other larger firms and lawyers in San Francisco, New York City and Washington D.C. From time to time our clients who have great ideas need to get those ideas implemented through some of our federal agencies in Washington, so I try to provide not only the required legal work but I also deal with potential impediments with some of these federal agencies.

Opportunist: Why did you choose securities law?

Raul: I thought it would be the most fun. [Laughs] Before going to law school I spent about seven years with General Electric as a regional director doing inventory financing and I liked that but it wasn’t enough, so I decided I would go to law school. I started out at a regional firm called Holland & Hart. They now have offices throughout the Western United States, Washington, D.C., London and China. That was a good experience for me and I learned a great deal from it before I took my sabbatical to spend time as a public servant. I enjoy doing what I do and securities has been essentially my focus.

Opportunist: What do you enjoy most?

Raul: I have the opportunity to visit with a lot of very talented people who have great ideas, and then I am fortunate enough to be able to help them develop those ideas by assisting with business plans and taking them through the various steps to eventually become publicly trading companies.

Opportunist: What’s it like to deal with all the regulations?

Raul: Regulations are regulations—whether it be in the municipal or the federal area—they do not create anymore of an impediment than anything else. While the new regulations coming from Dodd Frank are requiring a greater level of disclosure than the market was used to in the past, I have practiced in this area long enough that none of these regulations seem to be so imposing that they cannot be overcome. Some provide for more disclosure and more transparency, and I think that’s important for the potential investor and ultimate shareholder who want to buy securities.

Opportunist: Tell us about your experience with the Administrative Conference of the United States during the Ford presidency.

Raul: I was appointed by President Gerald Ford to be a member of the ACUS, which is made up primarily of lawyers. Our duty was to take statutes passed by members of Congress and try to make sense of them by providing rules by which those statutes could be implemented in the most clear-cut way.

Opportunist: How so?

Raul: They need to be interpreted in such a way that people can comply with those rules. Everyone was concerned about regulations and new statutes that the legislation would pass. We spent a lot of time making sure the rules that went along with those statutes were easy to understand and implement.

I was also involved with putting together the first sunset laws, which meant that these regulations would expire after a certain length of time. We would recommend whether a particular agency was benefitting the public or if it should be modified or eliminated. Regulation of any kind is expensive and can be construed as a tax even though we call it a fee. It is a burden for someone trying to get started in business.

Opportunist: Are those regulations particularly burdensome when working with small cap companies?

Raul: Small or micro cap companies aren’t as difficult to work with as they are expensive because lawyers and accounting firms must take more time with them. The SEC and FINRA [Financial Industry Regulatory Authority] need to think about implementing these rules in stages. Whether you’re a small cap company only generating $10 million in revenues or a $100 million or a billion-dollar company, there is still disclosure to be made. We cannot, however, discourage people from trying to take their idea and going through all the mechanical steps to make that company come to fruition. It’s not easy by any means, but my experience is that if we keep on keeping on their company can come to fruition. My main concern in working with small companies is how long will it take for me to get all those comments answered so we can get this company public and it can generate some of its own capital to keep growing? I try to work efficiently because every day the company is not public is a day someone is not getting the benefit of their product.

Opportunist: What are some of the statutes you worked on for the ACUS?

Raul: It’s been a while now, so I cannot recall where it all had impact. [Laughs] The 90 lawyers were broken down into committees so that we could be responsible for suggesting implementation of rules in different areas of commerce. Since I’m from the West, where we have problems with water, I was concerned with how we allocated our water sources and whether we built dams. We depend on runoff from mountains and springs for our drinking water and for our agriculture as well, so I thought that was important and that was what I represented.

That was a good experience for me because Gov. Dick Lamm appointed me to the Dept. of Regulatory Agencies here in Colorado.

Opportunist: What were your duties there?

Raul: It was a very busy time. The state banking, securities and even the public utilities commission that regulates our fuel, our heat and sources of that kind of energy and whether we should have coal or alternatives to coal—all of the state licenses came out of my department. I reported to the governor in all areas.

Our sunset legislation was very important. We didn’t know if we had too many agencies to govern our everyday lives or if we had too few. We would review agencies and then tell the governor if it was worthy of continuing. That was fun to do, but I had to have a decent attitude about it and I assured people that before we would terminate their agency we would give them an administrative hearing. Sunset provisions are still being implemented today. Each agency is up for review every five years.

I was there about four years when my friend Sam Brown, who was then appointed by President Carter to run the Action Agency, called to see if I had an interest in going to Washington D.C. to be the inspector general for the Office of Compliance of the Action Agency, supervising VISTA and the Peace Corps.

Opportunist: What are some highlights of your time there?

Raul: That’s a highlight all by itself. In retrospect, and even when I was part of that, I couldn’t think of a more worthy cause this country had ever attempted. It was President John Kennedy who had the idea for VISTA, which was founded as Volunteers in Service to America and is now known as VISTA AmeriCorps. [Sargent] Shriver had the idea for the Peace Corps. We are providing unbelievable work in Third World countries and also areas that have been decimated here in this country whether by [Hurricane] Katrina or helping with Native Americans and the reservations. Having our kids in various parts of Africa, Latin America and now in Eastern Europe or wherever countries are beginning to develop, is our best contribution that we made and continue to make in terms of those programs.

Opportunist: What was your role?

Raul: I was responsible for making sure that the budgets allocated by Congress were spent in the manner Congress intended. My role was in overseeing the accounting of the expenditures and visiting some of the countries to make sure Peace Corps volunteers were doing what they were supposed to do and that we were a positive force and not a negative one. Once in a while you’d have a circumstance I would need to assist maneuvering through. For example, when Nicaragua and El Salvador became dangerous, we had to leave the country temporarily until those conflicts subsided. My responsibility was to always be a liaison with the State Department because we had an ambassador in all those countries.

I was fortunate in receiving both of those presidential appointments.

Opportunist: Have you worked with any other administrations?

Raul: Before I ended my term in Washington I ended up working for President Reagan because my time there overlapped with their appointment of an inspector general for the agency. In addition to my time as Inspector General, I have spent a significant amount of time working on several different political campaigns. My friend Dick Gephardt and I visited Iowa at this time of year during his two presidential campaigns in 1988 and 2004. I did some ancillary work for Clinton and Obama, but I have been most actively involved in the Congressional races. My primary focus has been on my Representative here in Denver; I have served as Congresswoman Diana DeGette’s Finance Chair and knew and supported Congresswoman Pat Schroeder, the previous district representative. I enjoy staying in touch with these people and the new members of Congress.

Opportunist: Can you tell us about a few of the most memorable companies you have taken public?

Raul: Sense Technologies, in Omaha, Neb., developed a sensor device to detect and avoid objects at the rear of a vehicle. Statistics showed that drivers were running over and killing 250-300 people per year. I spoke with my good friend Federico Peña, former U.S. Secretary of Transportation, about this dilemma and what we should do about it. With his help, along with Congresswoman Shelley Berkley and Congressman Jim Oberstar, we were able to get legislation passed to require devices like Sense’s product on delivery vehicles in order to be able to save lives.

I still go back and forth to Washington when there’s a need for me to talk to people who can help us get legislation that will help the public and small businesses implement their business plan.

Over the past several years I have been working on a small company based in Missoula, Mont., which owns the mineral rights to over 4,000 acres of private wilderness property. Two years ago the Registration Statement I filed was declared effective by the SEC and since that time Grant Hartford Corporation has been exploring its property in an effort to bring its gold mineralization into the commercially minable range. I am uplifted by the progress they make each year and continue to prepare their 34 Act Filings.

My newest project is an education company that goes back to the fundamentals of English, Math and Phonics. If you don’t start out understanding phonics it’s going to be real hard to learn how to spell. When I was a child school was difficult for me because my family spoke Spanish and I didn’t know for sure how this English fit in with everything, but I found out that you really needed to have it. This company has a product that you can implement to determine what level a student is performing at, and then it creates a lesson plan with additional periodic testing to ensure the student is progressing toward the desired level. It lifts kids up and provides them the direction they need early on.

Opportunist: Who is the most impressive person you’ve met?

Raul: My father. He was the one who instilled work habits and taught us that whatever you do you should do it the best you can. My father thought education was important too, even though I wasn’t as excited about it as my two brothers were. [Laughs] I’m from a little town called Torrington, Wyo. We were migrant workers, and it became a struggle trying to go to school because we weren’t in one place very long and my family worked long hours in the fields. My parents were persistent in making sure we went to school and through their efforts all three boys got to the University of Wyoming. My older brother is a pharmacist and my younger brother is an administrator at a junior college here in Denver.

Opportunist: What changes have you seen in the securities industry?

Raul: More disclosure. We may have overreacted from Enron and other companies in the late-‘80s and mid-‘90s—starting with The Sarbanes–Oxley Act that wanted more disclosure and wanted to have audit committees within corporations that were independent to watch over how the public’s money is being invested. Now we are seeing the rules coming from Dodd Frank, which are creating a climate of increased disclosure into the daily workings of a business. The SEC and FINRA are the new and revamped police force charged with preventing another crash like we have recently seen. On one hand I am encouraged that it seems these organizations are taking industry professionals’ opinions into account; however, the new rules have a propensity to look a bit ominous and are certainly increasing the costs associated with operating a public company. I am eager to see where all the chips fall, as it is my view that when we did away with the separation between regular banks and investment houses, it was the major cause of our demise in Wall Street. We still need a Wall Street but we need it properly regulated, but not over regulated so as to stifle business ingenuity.

Opportunist: How can that be done?

Raul: We should not overburden companies with regulation from the securities side, but by the same token we need to make sure that people comport to some standard of conduct. For example, if you’re a publicly trading or reporting company you have to have an audit committee and a committee that deals with employment and credentials and a governance committee. Shareholder meetings and board of directors meetings are mandatory and some have to be independent so that no one within a corporation does self-dealing and defrauds the public. My friend Jon Corzine is going through some of that right now. How did his company lose $1.5 billion? I guess it escaped somewhere. That’s a lot of zeroes.

The Glass–Steagall Act separated banks from being conglomerates that could do anything. Banks were banks and you could go borrow money from them. Now you just have investment bankers that bundle up securities—whether they’re good or bad—and send them off to the world. Bad loans are bad loans whether they are in Asia or Latin America. There were a lot of people complicit in those bad mortgages.

We in private industry need to be vigilant to comment on proposed statutes, be in contact with our own members of Congress—House and Senate—and be there when agencies start promulgating rules to implement statutes.

Opportunist: How do you feel about America as we ring in the New Year?

Raul: I am looking forward to 2012 and all its possibilities. It’s a bit unfortunate that our economic base is eroding in some ways. We don’t have enough jobs for people who are living here. With no jobs how are you going to generate revenues? We seem to have exported all of our labor elsewhere around the world, so I guess we have to create products that are going to be exported around the world.

How will this generation and the generation after that compete when we keep taking money away from education and putting it someplace else? It seems like kids in other parts of the world are in class almost 10 hours a day, seven days a week. The only industry that is growing is our prison industry because we’ve got to have a place to put people who aren’t employable and from that perspective it’s a sad state of affairs. Hopefully, the companies I work with will create jobs here in the United States where we can take our product and market it all around the world. It’s great to see the Chinese coming here, at least in the companies I’m representing. And the educational program I was talking about is here and we can market it to all around the world.

Opportunist: What changes would you like to see?

Raul: Everything the government does should be focused on creating jobs.
Making capital more accessible to small businesses so they will be able to create jobs here in this country. We need to have a sensible immigration policy. I’m not saying anybody should come here without restrictions; they should somehow register so we know who is here, but it should be practical. Maybe people can come here to harvest and then go after the season, like they did during the Bracero Program back in the 1940s. I don’t know if it was because we were at war and didn’t have the labor force to harvest agriculture in Florida or California or the Midwest. We need to get people who have been here for a while to become citizens so they pay their share of taxes.

Leslie Stone is an award-winning writer/editor with more than two decades of experience covering business, finance and lifestyle issues for newspapers, magazines and online publications. Originally from Virginia, she currently resides in the Orlando area.