The SEC’s Inspector General discovered that the SEC signed a 10-year lease worth $556.8 million on office space in downtown Washington that went largely unused.
Inspector General David Kotz discovered that last year the SEC quickly leased 900,000 square feet of office space in the Constitution Center in southwest Washington and then discovered that it didn’t need at least two-thirds of it.
The powerful agency was preparing to hire at least 800 new employees to enforce the financial regulations in the Dodd-Frank Act, a piece of legislation passed last year in the wake of the financial crisis.
A ‘deeply flawed and unsound process’ was used by the SEC in anticipating extra funding from Congress, the report from the Inspector General stated. The anticipated funding never came.
The report stated: “We found that OAS grossly overestimated the amount of space needed at SEC headquarters for the SEC’s projected expansion by more than 300 per cent and used these groundless and unsupportable figures to justify the SEC committing to an expenditure of USD 556,811,589 over 10 years.”
Currently, the SEC is trying to sublet the rest of the unused space in the Constitution Center but has not so far managed to find a tenant.
Now the landlord of the building, David Nassif Associates, is suing the SEC for approximately $94 million in damages it caused.
Kotz added that since Congress granted the SEC independent leasing authority in 1990, it has made a series of costly blunders.
Editor’s notes: In July 2011, David Nassif Associates said it had agreed to release the SEC from occupying 550,000 square feet (51,000 square metres) of space at Constitution Center. However, a period of dispute over build-out costs and back rent ensued.
In December 2012, it was announced that MetLife and an unnamed investor had each purchased a 50 per cent stake in the building for a combined $734 million – the most expensive price paid for a single building in the District of Columbia.
As of June 2023, the building, just steps from Capitol Hill, is home to the Office of the Comptroller of the Currency, the Federal Housing Finance Agency, the General Services Administration, the Federal Trade Commission, the National Endowment for the Humanities, and the National Endowment for the Arts.
As of September 2026, it was discovered that Constitution Center was owned by CC Owner LLC and was fully leased, with occupiers listed as the Office of the Comptroller of the Currency, the Federal Housing Finance Agency, the General Services Administration, the National Endowment for the Humanities, Centers for Disease Control & Prevention, the Administration for Strategic Preparedness & Response, and the National Endowment for the Arts.