Report says SEC leased space it didn’t need
The Securities and Exchange Commission conducted a “deeply flawed and unsound analysis” to justify a $556.8 million lease for largely unneeded office space, an investigation by the SEC's inspector general found
The Securities and Exchange Commission conducted a “deeply flawed and unsound analysis” to justify a $556.8 million lease for largely unneeded office space, an investigation by the SEC’s inspector general found.
The report, by Inspector General David Kotz, released last week, also accused commission officials of backdating a document to obscure a missed deadline. The owner of the space is seeking to recover $94 million in costs for the botched deal, the report said.
SEC officials rushed to secure 900,000 square feet of space last year after it appeared it would need hundreds of new employees to enforce Dodd-Frank Act regulations.
The lease deal assumed that the SEC would receive the entire $1.3 billion 2011 authorization included in Dodd-Frank, ignoring the political likelihood the midterm elections would allow House Republicans to resist budget increases.
“Even if those assumptions had been well-founded and a reasonable basis for leasing space, justifiable projections for the SEC’s expansion at headquarters, based on those assumptions, would not have supported leasing 900,000 square feet,” the report said. Before the deal, an SEC employee wrote in an e-mail that it was a “stupid, wild-ass guess.”
SEEKING A REVIEW
SEC Chairman Mary Schapiro has asked her chief operating officer to review the report, said John Nester, a commission spokesman. An oversight committee is being created to review “all major leasing decisions,” he said.
“The agency does not believe any damages are owed,” Mr. Nester said.
Mr. Kotz’s report recommended that at least one commission official be disciplined “up to and including dismissal.”
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