According to US Securities and Exchange Commission chairman Mary Schapiro, the General Securities Administration will likely take over the SEC’s leasing space system following the agency’s $550 million deal for 900,000 square feet of office space that it ended up not needing. Schapiro made her statements during testimony before a House subcommittee that oversees public buildings. The subcommittee has been looking at the deal.
The SEC made a 10-year deal to rent space at the Constitution Center in DC. The agreement was reached after the 2010 Dodd-Frank Act suggested that the SEC would need to hire hundreds of new employees because of its new tasks. However, the SEC never received the entire $1.3 billion that the reform bill had authorized for this year and the agency had to tell the property owner that it didn’t need the leased space.
Schapiro said she leased the space after she was notified that there were no other leasing options and that the price was right. It was just weeks later that she realized that the SEC couldn’t afford that degree of expansion. Last fall, the agency backed out of about 600,000 of the square feet it had leased. Two other agencies ended up taking most of that space. Meantime, the rest of the space has not been subleased and the landlord is now claiming the agency owes it almost $94 million in damages.
Last May, SEC Inspector General H. David Kotz made available the findings of his offices’s probe into the deal. According to Investment News, Kotz said the agency’s analysis had been “deeply flawed and unsound” and that he wants to ensure that SEC officials who were responsible are held “appropriately accountable.” Schapiro and the SEC recently told Kotz about how they intend to fix the system.
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Related Web Resources:
Schapiro says GSA will take over SEC leasing after $557M mistake, Investment News, July 6, 2011
UPDATE: Lawmakers Criticize SEC For Lease On Space Never Used, The Wall Street Journal, June 16, 2011
SEC Office of Inspector General
General Securities Administration
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