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In June 2009, Securities and Exchange Commissioner Kathleen L. Casey began a whirlwind of travel that took her to Israel, Japan, Switzerland and France in the space of a month.While in Israel, Casey rang up $36 in hotel charges in a single day for soft drinks, cashews and almonds.
In Japan, she made a telephone call that cost $64.
In Switzerland, Casey’s bill for two nights included $213 in phone charges. And in France, her one-night stay at the Castile Hotel in Paris included $308 for the room, $272 in meal charges ($187 of that for dinner), and $36 in mini-bar charges.
Travel records obtained by JunketSleuth through the federal Freedom of Information Act show that that Casey was hardly the only SEC representative whose trips included questionable charges.
The agency’s nearly $30 million in travel spending between February 2008 and June 2011 included stays at luxury hotels and resorts, meals costing $75 and more, indiscriminate mini-bar charges and other expenses that could have been easily reduced or eliminated.
The SEC told JunketSleuth that travel was a necessary part of its mission. It noted that spending on domestic and international trips amounted to just 1.1 per cent of its budget.
INCREASE IN SPENDING
The SEC has boosted its travel spending by 25 per cent since 2008, which might be understandable given the upheaval in the financial markets. The database of travel records that the agency provided to JunketSleuth showed that it spent $12 million on trips in its 2010 fiscal year, which amounted to about $3,000 per employee.
The data the SEC provided did not include the purpose for many of the trips, making it impossible to determine what percentage of the agency’s travel was for meetings, conferences and speeches, and what percentage was for investigation and enforcement.
The SEC was created in the 1930s, at the height of the Great Depression. The agency says on its website that it seeks to protect investors and to encourage capital growth by helping maintain fair, orderly and efficient markets.
Every year, the SEC files hundreds of civil enforcement actions alleging violations of federal securities laws, including ones regulating fraud and insider trading.
Although the agency has no foreign locations, it does have an Office of International Affairs, which works with other countries to ensure cross-border compliance with securities regulations and to assist in investigations and prosecutions.
JunketSleuth examined about 22,500 electronic records of trips taken between Feb. 11, 2008 and June 7, 2011. We also reviewed copies of more than 1,500 hotel bills and other original travel receipts.
Those records are being posted today.
During the period covered by the data, SEC employees traveled to between 800 and 900 destinations in all 50 states, two territories (Puerto Rico and the U.S. Virgin Islands) and 54 foreign countries.
“We travel for many reasons, including enforcement investigations, inspections and examinations of broker-dealers, investment advisers and other registrants, meetings with fellow securities regulators and training, to name a few,” an SEC representative said in a written statement to JunketSleuth. “We also speak at industry conferences to encourage compliance with the federal securities laws.”
The SEC noted that its travel costs, as a per cent of its overall spending, increased only modestly, rising from 1 per cent of the budget in 2008 to 1.1 per cent in 2010.
The percentage of the budget that the SEC devoted to travel last year was among the lowest we have seen for any federal agency.
THE MOST EXPENSIVE TRIPS
Six of the SEC’s 10 most expensive trips – each costing more than $10,000 – were to foreign countries, four of them to Japan. 40 three of the 100 most expensive trips also were international.
The most expensive trip during the period covered by the SEC’s data was an eight-day journey to Tokyo earlier this year that cost $22,039, or more than $2,700 a day. The purpose of the trip was listed as “audit on site/inspection.”
A second SEC employee traveled to Tokyo on the same days for a total of $15,579, or about $1,950 a day.
The database provided by the SEC shows that employees took nearly 700 foreign trips, or an average of about 17 per month. Many were to the financial or regulatory centres of Europe – London, Brussels, Paris and Zurich.
But others were to obscure destinations or resort areas, including:
The Isle of Man, in the Irish Sea between Great Britain and Ireland; Accra, Ghana; Cancun and San Jose Del Cabo, Mexico; Curaçao, an island in the southern Caribbean off the Venezuelan coast; Lima, Peru; Nairobi, Kenya; and Cape Verde, a series of islands off the African coast.
SEC employees took at least seven trips to Jordan, a country not known as a hotbed of securities activity. According to the database, four of the trips were for training, one was for a meeting and one was listed as “other.” The purpose of the seventh was not explained.
We were unable to determine the cost of the trips to Jordan from the data that the SEC provided.
Six of the SEC’s foreign trips were to the Republic of Trinidad and Tobago, in the southern Caribbean just off the coast of Venezuela. Four others were to Romania; and three each were to Argentina, Jamaica, South Africa, Poland and Nigeria.
The SEC said 169 of its foreign trips were for meetings. It said 53 others were for conferences, 32 were for speeches or panel discussions, and 16 were for training.
The agency said 41 of the trips were for testimony, 24 were related to litigation, 21 were for depositions and 21 were for audits or inspections.
The SEC’s database did not list a reason for 326 other foreign trips.
The records show that in September 2008, near the height of the global financial meltdown, two SEC attorneys spent more than $18,000 on a trip to Ireland.
Each stayed for 10 nights at the four-star Morrison Hotel in Dublin; their itemized receipts show that their room charges, including meals and incidentals, exceeded $500 per night.
The SEC said that the two attorneys went to Ireland to take testimony as part of an investigation.
And although the amount they spent on lodging, meals and other items might appear high, it was not far off the federal government’s per diem rate for Dublin, which was $499 in 2008.
The SEC database shows that four employees traveled to Bermuda in 2009 and 2010. The agency did not list the reasons for two of the trips, including one that cost more than $4,100. It said the third employee went to the island for a meeting, and a fourth was a speaker at an event.
Copies of documents for one of the trips for which no reason was provided show that the employee, an SEC attorney, stayed at The Fairmont Southampton. The hotel website, provides this description of the resort:
“On nearly 100 tropical acres dotted with lush bougainvillea and towering coconut palms, the Bermuda resort is the summit of luxury, offering unparalleled amenities throughout the entire property: An 18-hole par three golf course, a 31,000-square-feet Willow Stream Spa and some of the island’s finest restaurants… sprawling oceanfront beach club with an on site PADI dive centre, tennis courts and more.”
During the five-night stay, the SEC attorney ran up a $2,033 hotel tab, which included about $285 a night for the room, $434 in room service charges and a $108.50 mini-bar charge.
The copies of receipts for that trip do not bear any notations showing that the employee classified any of the expenses as personal or paid them himself rather than having the agency pay.
Auditors have previously questioned the SEC’s travel practices.
In a November 2008 report, the SEC Office of Inspector General, charged with combating waste and fraud, criticised the agency’s policies on premium-class travel upgrades.
The following November, the inspector general found that a senior official at the SEC’s Fort Worth office made arrangements for herself and three other employees to stay overnight at a bed and breakfast owned by the senior official’s brother and sister-in-law.
In February of this year, the inspector general found that an employee improperly received compensation time for travel.
JunketSleuth noted that the travel data that the SEC provided in response to our Freedom of Information Act request significantly understated total agency travel costs.
We found that records for a number of foreign trips identified in hotel receipts and other paper documents we received from the agency were not in the database of travel records that covered the same period.
For example, the database contains records for only $3.54 million in travel spending for fiscal 2008, and $8.83 million for fiscal 2010.
But when JunketSleuth sought to verify those figures with the SEC, the agency said that travel spending for those years totaled $9.62 million and $12 million, respectively.
The paper records provided by the SEC included receipts from a 2008 trip to Korea, where the airfare alone was $9,326.
An agency spokeswoman said the trip was not in the SEC’s electronic database because the Financial Supervisory Services of South Korea, a government agency, paid for the trip.
The SEC’s database also listed a 2010 trip to South Korea as costing only $540. The agency said that the $540 represented only meals and incidentals. It added that an outside entity paid for lodging, and that $936 in airfare and transaction costs were “paid on the SEC’s Centrally Billed Account” – apparently an account that was not included in the data provided to JunketSleuth.
Our Freedom of Information request to the SEC sought the “total cost of trip and/or amount(s) paid to the traveller.” The data provided by other federal agencies has typically included all travel expenses.
Asked about the discrepancies, the agency spokeswoman directed JunketSleuth to the SEC Freedom of Information Act office, which is not the office responsible for answering questions from journalists.
Taking into consideration that the database does not contain all trips and costs, our analysis shows that the SEC’s commissioners were among the people who traveled most frequently, and who took more international trips than other agency employees.
The SEC has five commissioners, who are appointed by the president and approved by the Senate. The current lineup is Chairman Mary L. Schapiro and commissioners Casey, Elisse B. Walter, Luis A. Aguilar and Troy A. Paredes.
Casey, however, announced last month that she was leaving the SEC, having completed her five-year term.
With the exception of Schapiro, whose tenure began in 2009, all were commissioners for the entire period covered by the travel data that the SEC provided to JunketSleuth.
Together, the commissioners spent $125,101 on travel in that period, SEC records show. Of that amount, $54,448 – or more than 43 per cent – was for foreign travel.
Nearly one of every five trips by commissioners was outside the United States, the records show.
But the total expenses listed for some trips by the commissioners appeared to be lower than the trips should have cost. Also, not all of the trips taken by the commissioners were included in data the SEC provided.
For example, according to the agency’s electronic data, nine trips by commissioners to South America and Europe each cost less than $1,600, with three listed at less than $1,000.
Airfare alone to some of those destinations can cost more than the reported amounts for the entire trips.
The data that the SEC provided shows that Schapiro made four trips to London, one to Paris and one to Montreal, Canada.
Four of the trips were for meetings, and one was for a speech. The reason for the sixth trip was not provided.
Aguilar went to Madrid, Spain, for five days in June for a speech, the records show. He went to Rio de Janeiro for six days last year for a conference, and to Punta De Este, Uruguay, in 2009. The reason for that trip was not specified in the database.
Walker and Paredes made only one foreign trip each: Walker went to London in 2010 to be a speaker or panelist at an event, and Paredes went to Belgium the same year for a speech.
Casey made 14 international trips during the 40-month period covered by the data. That was more than the other four commissioners combined.
The SEC told JunketSleuth that, since 2008, Casey has been the commissioner designated to represent the SEC internationally.
Of the 36 trips that Casey made during the period covered by the SEC’s data, more than a third were to foreign countries. Her desitnations included The Netherlands, Switzerland, China, Belgium, France and Spain.
The reasons for nine of her international trips were not provided. Four other trips were for meetings and one was for a conference.
But the countries listed in the SEC’s database weren’t the only ones that Casey visited. Hotel and other receipts obtained by JunketSleuth show she also made trips to Australia, Israel, Japan and Italy.
In addition, Casey took a second trip to Switzerland. Records of that journey were not included in the electronic data provided by the SEC.
Records show that at least two of those trips were partially or fully paid by private foreign entities, which is allowed under federal regulations.
Data and other records documenting her travels from February to November 2009 provide a snapshot of her overall travel spending.
Casey took a five-day trip to Australia in late February and early March of 2009. The trip was sponsored by the Australian Securities and Investment Commission and cost more than $11,000.
Two months later, she went to New York. Her one-night stay at the Gramercy Park Hotel included a $395 room charge, $87.98 for a room service dinner and a $12 “private bar” charge.
Less than three weeks later, on June 7, 2009, Casey was at the Hilton in Tel Aviv, Israel.
Her bill there included charges for $24 for Coke and Diet Coke and $12 for almonds and cashews – all on the same day.
One day after leaving the Hilton in Tel Aviv, records show, Casey checked into the Intercontinental Hotel in Tokyo, where her bill included a $64 phone call.
Nine days after checking out of the Tokyo hotel, Casey checked into the Hilton in Basel, Switzerland. The visit to Basel was one of the trips not included in the data the SEC provided to JunketSleuth.
Casey stayed two nights, paying $272 a night for the room, $124 in meals (including two separate breakfast charges on the same day) and $213 in telephone charges. The timing of the trip coincides with the inaugural meeting of The Financial Stability Board, an organisation that monitors the global financial system.
Eleven days later, on July 8, 2009, Casey was at the Castille hotel in Paris.
From Aug. 26 to 29, Casey was in London.
A little more than two months later, on Sept. 14, 2009, Casey was back in Paris, staying at the $356 per night Pullman. The following month, she returned to Switzerland, and also made a trip to Canada.
In November 2009, she paid $491 for a room at The Michelangelo in New York. Thirteen days later, she was back in New York, at a $393-a-night room at a New York Marriott, where she spent $78 and $45 on room service meals in the same day.
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