WASHINGTON, DC-The Securities and Exchange Commission has agreed to give up its leasing authority after a House subcommittee hearing held by Rep. Jeff Denham, chairman of the Economic Development, Public Buildings and Emergency Management Subcommittee. The topic of the hearing, which included testimony from both the SEC chairman and inspector general, concerned its recent lease at Constitution Center--a lease that included hundreds of thousands of square feet of unneeded space. 

According to a statement from Chairman Denham, not only has the SEC agreed to give up its leasing authority, but many of the SEC employees may also face prosecution from the Justice Department for backdating documents that "justified" the lease. The SEC declined to comment to GlobeSt.com beyond the testimony.

Briefly last summer the agency announced it was leasing roughly 900,000 square feet of space at Constitution Center, a newly-renovated office building at 400 Seventh St., in what would be a $556-million deal. By October, however, the SEC had determined that it would not need 600,000-square feet after all, nor the 500,000 square feet that had been subject to the right of first refusal. A report (PDF) by the agency’s inspector general earlier this year took the agency to task for its decision-making leading up to the lease and concluded it may well have violated federal law by moving forward without waiting for Congressional appropriations to fund it.

“It is inconceivable that the SEC bound the taxpayer to more than a half a billion dollars based on ‘back of the envelope’ calculations that were inflated and just simply wrong,” said the Congressman in a statement. “And, it is even more disturbing that such a lease was signed without any formal internal written approval, no OMB approval and no Congressional approval. On top of that, the SEC proceeded with a sole source contract, ‘negotiated’ over the course of just days, based on a justification document that was backdated and altered,” Denham continued.

Denham’s hearing, held Tuesday, was a follow up to the IG’s report. At the hearing, the SEC agreed that it does not need the leasing authority, a spokesperson from the Congressman's office tells GlobeSt.com. In May, Denham introduced legislation in the House, the Civilian Property Realignment Act (H.R. 1734), to eliminate the SEC’s independent leasing authority. Until the law changes, the SEC's move is not a permanent one, the spokesperson added.