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Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Wednesday, May 25, 2011

SEC Signs Lease for Unnecessary Space, Backdates Documentation

Once again the SEC is caught in an embarrassing incident involving its leasing of space.  In addition, the SEC Inspector General's Report on its investigation of this episode found that SEC personnel backdated forms to cover up unauthorized actions.  According to the executive summary:

The OIG investigation found that the circumstances surrounding the SEC's entering into a lease contract with David Nassif Associates ("DNA") for 900,000 square feet of space at the Constitution Center facility in July 2010 represents another in a long history ofmissteps and misguided leasing decisions made by the SEC since it was granted independent leasing authority by Congress in 1990....

The OIG investigation further found that based upon estimates ofincreased funding primarily to meet the requirements ofthe Dodd-Frank: Wall Street Reform and Consumer Protection Act ("Dodd-Frank"), between June and July of2010, the SEC Office ofAdministrative Services ("OAS") conducted a deeply flawed and unsound analysis to justify the need for the SEC to lease 900,000 square feet of space at the Constitution Center facility. We found that OAS grossly overestimated the amount of space needed at SEC Headquarters for the SEC's projected expansion by more than 300 percent and used these groundless and unsupportable figures to justify the SEC committing to an expenditure of $556,811 ,589 over 10 years.

The OIG investigation also found that OAS prepared a faulty Justification and Approval to support entering into the lease contract for the Constitution Center facility without competition. This Justification and Approval was prepared after the SEC had already signed the contract to lease the Constitution Center facility. Further, OAS backdated the Justification and Approval, thereby creating the false impression that it had been prepared only a few days after they entered into the lease contract. In actuality, the Justification and Approval was not finalized until a month later.

See REPORT OF INVESTIGATION UNITED STATES SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL, Case No. OIG-553, Improper Actions Relating to the Leasing of Office Space

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