Despite a hefty increase in its budget, the SEC is being forced to cut back on hiring and travel after cost overruns stemming from several office relocations. The Wall Street Journal
reports that one SEC staffer is on administrative leave and that two others have been reprimanded because of up to $50 million of overruns.
The paper adds that the problem originate when an SEC staffer became ill last winter and failed to forward the budget information to the proper individuals. That unnamed staffer later died.
Those overruns are also leading to inquiries from the House Appropriations subcommittee that overseas the SEC's budget, the paper adds. Rep. Frank Wolf (R., Va.), chairman of the subcommittee has requested the Government Accountability Office to investigate the overruns.
The budget problems came after the SEC decided to move to new headquarters in Washington D.C. and relocate offices in Boston and New York. Those moves created higher than predicted security and facility costs.
In Washington, the SEC will pay $40 million in annual rent starting in fiscal 2006 and another $65 million for enhanced security, design, equipment and furniture, the paper reports. Those costs are $19 million more than it budgeted. Meanwhile, the New York office went $19 million over budget and the Boston office $1.3 million over its limit.
The bulk of SEC officials overseeing the fund industry are located in the Boston office. That move will take place in 2006 and was budgeted at $90 a square foot. The SEC has revised that estimate to "well above $100 a square foot," the WSJ reports.
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