Church of Jesus Christ of Latter-day Saints Fined $5 Million by SEC for Alleged Investment Reporting Violations
By The Church of Jesus Christ of Latter-day Saints and its investment manager, Ensign Peak Advisers Inc., have been fined $5 million by the US Securities and Exchange Commission (SEC) for allegedly failing to disclose their investments accurately and obscuring the size of their $32 billion portfolio.[0]
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said in a statement: “The requirement to file timely and accurate information on Forms 13F applies to all institutional investment managers, including non-profit and charitable organizations.”[1]
In June 2019, the SEC expressed concern about Ensign Peak’s reporting approach and the Church adjusted its approach by filing a single aggregated report.[2] Since then, 13 quarterly reports have been filed in full accordance with SEC requirements.[2]
According to the SEC, Ensign Peak created 13 shell companies (LLCs) to file forms instead of using its own name and misstated Ensign Peak’s control over the Church’s investment decisions.[3] The Church was concerned that disclosure of its portfolio would lead to negative consequences and consented to the creation of the shell companies.[4]
The allegations first came to light when a group formerly called MormonLeaks and now known as the Truth and Transparency Foundation claimed in 2018 that the extent of the Church’s investments had reached $32 billion.[5]
The Church and Ensign Peak have cooperated with the government over a period of time as they sought resolution. In a statement following Tuesday's announcement, Church leadership said they had relied on Ensign Peak legal counsel on how to fulfill its reporting obligations.
The Church said: “We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed.”
The Church and Ensign Peak will collectively pay $5 million to resolve the allegations.[5] The money comes from donations from church members, a practice known as tithing, in which parishioners must give 10% of their annual income to remain in good standing.[6]
The settlement relates to how the forms were filed previously.[7] Since 2000, Ensign Peak has received and relied upon legal counsel regarding how to comply with its reporting obligations while attempting to maintain the privacy of the portfolio.
0. “Mormon Church, Investment Manager Pay $5 Million to Settle SEC Probe” Bloomberg, 21 Feb. 2023, https://www.bloomberg.com/news/articles/2023-02-21/lds-church-investment-arm-pay-5-million-to-settle-sec-probe
1. “SEC charges, settles with Mormon Church over investment fraud claims” UPI News, 21 Feb. 2023, https://www.upi.com/Top_News/US/2023/02/21/mormon-church-jesus-christ-latter-day-saints-sec-investment/1941677003293/
2. “LDS Church, investment fund charged with disclosure failures, misstated filings” FOX 13 News Utah, 21 Feb. 2023, https://www.fox13now.com/news/local-news/lds-church-investment-fund-charged-with-disclosure-failures-misstated-filings
3. “The Mormon Church Hid $32 Billion in Assets, Investigation Finds” TIME, 21 Feb. 2023, https://time.com/6257161/sec-mormon-church-investigation/
4. “Mormon church fined $5 million in SEC settlement” Axios, 21 Feb. 2023, https://www.axios.com/local/salt-lake-city/2023/02/21/mormon-church-fined-5-million-shell-wealth
5. “Mormon Church to pay millions to settle SEC charges” The Washington Post, 21 Feb. 2023, https://www.washingtonpost.com/business/2023/02/21/lds-church-sec-charges/
6. “Mormon Church and its investment manager fined $5 million by SEC” CNN, 21 Feb. 2023, https://www.cnn.com/2023/02/21/business/mormon-church-fined-sec/index.html
7. “Mormon Church pays $5 million to settle accusations it covered up $32 billion investment portfolio” ABC News, 21 Feb. 2023, https://abcnews.go.com/US/mormon-church-pays-5-million-settle-accusations-covered/story?id=97359553
