Ensign Peak Advisers Inc. and Church of Jesus Christ of Latter-day Saints Fined by SEC for Failing to Disclose Investments
By The Church of Jesus Christ of Latter-day Saints and its investment arm, Ensign Peak Advisers Inc., have been fined $5 million by the U.S. Securities and Exchange Commission (SEC) for failing to disclose its investments to the public.[0] The Church was concerned that disclosure of its portfolio, which by 2018 grew to approximately $32 billion, would lead to negative consequences, the SEC said.[1]
According to the SEC, Ensign Peak failed to file the required forms, known as Form 13Fs, in Ensign Peak’s name, which would have disclosed the church’s investments to the public.[2] Instead, the Church and the investment manager created 13 limited-liability corporations to obscure the Church’s portfolio, the regulator alleged.[3]
Ensign Peak, a non-profit that manages investments for the Church of Jesus Christ of Latter Day Saints, was required to disclose its ownership of publicly-traded securities because its portfolio exceeded $100 million.[4] To hide the scale of the Church’s holdings, Ensign Peak created shell companies around the United States and reported them as the real owners of those securities.[4]
To settle the charges, Ensign Peak agreed to pay a $4 million fine and the Church agreed to pay a $1 million penalty.[5] The Church also issued a statement saying that Ensign Peak had cooperated with the government over a period of time as it sought resolution.[6]
The Church said that, since 2000, Ensign Peak received and relied upon legal counsel regarding how to comply with its reporting obligations while attempting to maintain the privacy of the portfolio.[7] Therefore, Ensign Peak created individual LLCs that all submitted Form 13Fs separately rather than one collective filing.[8] The Church and Ensign Peak are of the opinion that all securities necessitating disclosure were included in the filings submitted by the individual businesses.[8]
In June of 2019, the U.S. Securities and Exchange Commission (SEC) voiced their apprehension in regards to Ensign Peak's reporting methodology Ensign Peak changed its strategy and started submitting one collective report. For the past 13 quarters, all reports have been submitted to the SEC in full compliance with their regulations.[6]
The Church also said it affirms its commitment to comply with the law, regrets mistakes made, and now considers this matter closed.[9]
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. “Church of Jesus Christ of Latter-day Saints and Its Advisor to Pay $5M in SEC Fines” ThinkAdvisor, 21 Feb. 2023, https://www.thinkadvisor.com/2023/02/21/church-of-jesus-christ-of-latter-day-saints-and-its-advisor-to-pay-5m-in-sec-fines/
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. “Mormon Church, Adviser to Pay $5 Million to Settle SEC Probe (1)” Bloomberg Tax, 21 Feb. 2023, https://news.bloombergtax.com/financial-accounting/lds-church-investment-arm-pay-5-million-to-settle-sec-probe
4. “The Mormon Church hid $32 billion in shell companies” Quartz, 21 Feb. 2023, https://qz.com/the-mormon-church-hid-32-billion-in-shell-companies-1850140376
5. “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/
6. “Mormon church and adviser pay SEC $5M to settle charges over obscured investments” Washington Examiner, 21 Feb. 2023, https://www.washingtonexaminer.com/policy/economy/sec-settles-mormon-church-investigation
7. “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
8. “Mormon church fined over scheme to hide $32 billion investment fund behind shell companies” NBC News, 21 Feb. 2023, https://www.nbcnews.com/business/business-news/mormon-church-multibillion-investment-fund-sec-settlement-rcna71603
9. “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
