The mission of the U.S. Securities and Exchange Commission (SEC) is to “protect investors, maintain fair, orderly and efficient markets and facilitate capital formation.” It was created by the Securities Exchange Act of 1934 to restore investor confidence in U.S. capital markets during the Great Depression by “providing investors and the markets with more reliable information and clear rules of honest dealing,” as well as to promote stability in the markets and to protect investors. President Franklin Delano Roosevelt appointed Joseph P. Kennedy—whose son later became President John F. Kennedy—to be the first chairman of the SEC. The agency’s functional responsibilities are organized into five divisions and 18 offices, each of which is headquartered at Station Place near Union Station in Washington, D.C. About 60% of the SEC’s approximately 3,900 staff are located in Washington; the rest work in 11 regional offices, in Atlanta, Boston, Chicago, Denver, Fort Worth, Los Angeles, Miami, New York City, Philadelphia, Salt Lake City and San Francisco.
Congress’s passage of the Dodd-Frank Act in 2010 significantly expanded the SEC’s mission and duties. The commission now is responsible for examining more than 11,000 investment advisers managing more than $43 trillion in assets, more than 5,000 broker-dealers with more than 160,000 branch offices and 7,500 mutual funds. It is going through a significant restructuring process.
The commission’s leasing and space management programs have had a troubled history since 1990, when Congress granted the SEC independent leasing authority (making it exempt from GSA regulations and directives), including several “expensive missteps” associated with the leasing and buildout of its current headquarters, which it moved into in 2006, as well as with subsequent decisions to expand the headquarters into additional buildings at Station Place. As of 2011, the SEC maintained about 2.5 million square feet of leased space nationwide and paid about $100 million in rent, roughly 8 percent of the agency’s annual budget.
The SEC found itself in hot water again in July 2010, when—because it expected to hire as many as 800 new employees over the next two years and double its budget by 2015 as it anticipated new duties specified by the Dodd-Frank Act—it entered into a $556 million lease for 900,000 square feet at Constitution Center (400 Seventh Street, S.W.) in Washington, D.C. , the renovated former headquarters of the U.S. Department of Transportation. Congress had, in fact, authorized a doubling of the Commission’s budget, but did not appropriate the money. The agency subsequently assigned 2/3 of its leased space to other federal agencies and it is still negotiating its exit from the remaining space.
A May 16, 2011 report by the SEC’s attorney general said the leasing decision was based on a “deeply flawed and unsound analysis” and “grossly overestimated the amount of space needed at SEC headquarters.” The report also noted that the leasing decision was made without competitive bids and involved the use of falsified and backdated approval forms. Last July, SEC Chair Mary Schapiro apologized to a House panel and agreed to relinquish authority for SEC leasing to GSA, saying “the SEC now recognizes the benefits of having the General Services Administration manage its future leasing, [which] is not our core mission.” The entire affair has put the leasing authority of other independent agencies in danger.