The U.S. Security & Exchange Commission (SEC) has reached a paltry settlement fine for $5M against The Church in an investigation that started with a whistleblower complaint about the use of tithing "donations."
SEC Charges The Church of Jesus Christ of Latter-day Saints and Its Investment Management Company for Disclosure Failures and Misstated Filings
FOR IMMEDIATE RELEASE
2023-35
Washington D.C., Feb. 21, 2023 —
"The Securities and Exchange Commission today announced charges against Ensign Peak Advisers Inc., a non-profit entity operated by The Church of Jesus Christ of Latter-day Saints to manage the Church’s investments, for failing to file forms that would have disclosed the Church’s equity investments, and for instead filing forms for shell companies that obscured the Church’s portfolio and misstated Ensign Peak’s control over the Church’s investment decisions.
The SEC also announced charges against the Church for causing these violations. To settle the charges, Ensign Peak agreed to pay a $4 million penalty and the Church agreed to pay a $1 million penalty.
The SEC’s order finds that, from 1997 through 2019, Ensign Peak failed to file Forms 13F, the forms on which investment managers are required to disclose the value of certain securities they manage.
According to the order, the Church was concerned that disclosure of its portfolio, which by 2018 grew to approximately $32 billion, would lead to negative consequences. To obscure the amount of the Church’s portfolio, and with the Church’s knowledge and approval, Ensign Peak created thirteen shell LLCs, ostensibly with locations throughout the U.S., and filed Forms 13F in the names of these LLCs rather than in Ensign Peak’s name.
✓ The order finds that Ensign Peak maintained investment discretion over all relevant securities, that it controlled the shell companies, and that it directed nominee “business managers,” most of whom were employed by the Church, to sign the Commission filings.
✓ The shell LLCs’ Forms 13F misstated, among other things, that the LLCs had sole investment and voting discretion over the securities. In reality, the SEC’s order finds, Ensign Peak retained control over all investment and voting decisions.
“We allege that the LDS Church’s investment manager, with the Church’s knowledge, went to great lengths to avoid disclosing the Church’s investments, depriving the Commission and the investing public of accurate market information,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “The requirement to file timely and accurate information on Forms 13F applies to all institutional investment managers, including non-profit and charitable organizations.”
✓ Ensign Peak agreed to settle the SEC’s allegation that it violated Section 13(f) of the Securities Exchange Act of 1934 and Rule 13f-1 thereunder by failing to file Forms 13F and for misstating information in these forms. The Church agreed to settle the SEC’s allegation that it caused Ensign Peak’s violations through its knowledge and approval of Ensign Peak’s use of the shell LLCs."
✓ Paul Feindt conducted the SEC’s investigation under the supervision of Tracy Combs and Tanya Beard of the Salt Lake Regional Office and Laura Metcalfe of the Denver Regional Office.
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Report: Mormon church investment fund had nearly $38 billion
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The church also owned $930 million in Google stock and $855 million in Amazon.
Mormon Church Moves Public Stock Holdings to Single Entity
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"This morning, the Salt Lake Tribune reported that Ensign Peak Advisors, the investment arm of the Church of Jesus Christ of Latter-day Saints, reported a total of $38.7 billion of holdings in the U.S. stock market.
Truth & Transparency first reported on this topic in May 2018 by uncovering $32 billion traded by 13 shell companies connected to the Church, and again last month when revealing the increased value of those shell companies as well as venture capital investments made by another shell company connected to the Church. . .
Last month, in another unprecedented move, the Church gave an exclusive interview to the Wall Street Journal discussing the portfolio, admitting to having intentionally obfuscated the paper trail with the shell companies discovered by Truth & Transparency. They feared that members would reduce their tithing donations to the Church.
Today’s story from the Tribune implies that this $38 billion is in addition to the money already reported by Truth & Transparency saying that Ensign Peak’s portfolio is “more diversified than any of those smaller funds.” However, closer analysis of the data suggests otherwise.. .
While it is true that Ensign Peak filed a report with the U.S. Security and Exchange Commission, none of the other 13 shell companies did, a fact the Tribune originally failed to report.
This suggests that the shares were moved under the known corporate umbrella of the Church, another unprecedented and surprising move.
> This hypothesis is supported by comparing the data from Ensign Peak’s most recent filing and the previous quarter’s filings from the shell companies. The number of entities the Church had invested only grew from 1,646 to 1,650 and the amount of shares traded between the two quarters is largely negligible.
> Additionally, the difference in shares between the two reports could be a result of consolidating other shell companies than the ones currently known. An entity only has to file these public reports if over $100 million is held at the end of the quarter. It is completely possible that the Church has other entities under its corporate umbrella that were not trading at that threshold.
The code used to perform the data analysis for this article can be found here.
In the coming days, Truth & Transparency will be publishing interactive graphs illustrating the known worth of the Mormon Church’s portfolio over time.
23 May 2020
RELATED
The Church of Jesus Christ of Latter-day Saints and its investment arm have been fined $5 million for using shell companies to obscure the size of the portfolio under church control, the U.S. Securities and Exchange Commission announced Tuesday.
The faith, widely known as the Mormon church, maintains billions of dollars of investments in stocks, bonds, real estate and agriculture. Much of its portfolio is controlled by Ensign Peak Advisers, a nonprofit investment manager overseen by ecclesiastical leaders known as its presiding bishopric.
The church has agreed to pay $1 million and Ensign Peak will pay $4 million in penalties based on the violation.
Ensign Peak avoided disclosing investments “with the church’s knowledge,” denying the SEC and the public of accurate information required under law, Gurbir Grewal, the agency’s enforcement director, said in a statement.
Federal investigators said for a period of 22 years, the firm violated agency rules and the Securities Exchange Act by not filing paperwork required that disclosed the value of its assets.
Instead, they said Ensign Peak filed the forms through 13 shell companies they created, even as they maintained decision-making power. They also had “business managers,” most employed by the church, sign the required shell company filings.
“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 in a statement announcing the charges.
Increasingly, the church and its Salt Lake City-based investment arm have faced scrutiny over the fact that tax law largely exempts religious groups from paying U.S. taxes. Ensign Peak is registered as a supporting organization and integrated auxiliary of the church. Investment managers of its size are required to report stockholdings quarterly.
It gained traction in 2019 when a whistleblower alleged the church had stockpiled nearly $100 billion in funds, rather than directing it toward charitable causes. Ensign Peak has since been a source of intrigue and mystery for the nearly 17-million member Utah-based faith, which encourages members worldwide to give 10% of their income in a what is known as “tithing.”
Two years later, prominent church member James Huntsman filed a lawsuit against the church alleging it misrepresented how it used donations and, rather than direct them to charitable causes, invested in assets including real estate and an insurance business. A judge dismissed the complaint last year and Huntsman later appealed the decision.
Earlier this month, the 2019 whistleblower, a former Ensign Peak investment manager named David Nielsen, submitted a 90-page memorandum to the U.S. Senate Finance Committee demanding oversight into the church's finances.
In a statement, church officials said over the time period investigated, none of their holdings had gone unreported and all had been disclosed through the separate companies. They said they had “relied upon legal counsel regarding how to comply with its reporting obligations while attempting to maintain the privacy of the portfolio" and noted that Ensign Peak had changed its reporting approach after learning of the SEC's concerns in 2019.
“We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed,” they said.
Sam Brunson, a church member and tax law professor at Loyola University Chicago, said the $5 million fine differed from past accusations leveled against Ensign Peak because the church appears to have admitted some fault.
A failure to fill out SEC paperwork may not fuel broader conversations about how the church manages its money, he said, yet it reflects an “incredibly aggressive” strategy to keep certain information from the public.
“For the last 70 years or so, the Mormon Church has had an ethos of keeping its finances private,” Brunson said.
This story was originally published February 21, 2023, 4:24 PM.
www.pbs.org
Mormon church fined $5 million for obscuring size of investment portfolio
"SALT LAKE CITY (AP) — The Church of Jesus Christ of Latter-day Saints and its investment arm have been fined $5 million for using shell companies to obscure the size of the portfolio under church control, the U.S. Securities and Exchange Commission announced Tuesday.
“We allege that the LDS Church’s investment manager, with the Church’s knowledge, went to great lengths to avoid disclosing the Church’s investments, depriving the Commission and the investing public of accurate market information,” Gurbir S. Grewal, the agency’s enforcement director, said in a statement.
The faith, widely known as the Mormon church, maintains billions of dollars of investments in stocks, bonds, real estate and agriculture. Much of its portfolio is controlled by Ensign Peak Advisers, a nonprofit investment manager overseen by ecclesiastical leaders known as its presiding bishopric.
The church has agreed to pay $1 million and Ensign Peak will pay $4 million in penalties based on the violation.
Federal investigators said for 22 years, the firm hadn’t filed required paperwork to disclose the value of some assets in violation of the Securities Exchange Act and agency rules.
READ MORE: Former Utah mayor, Mormon bishop accused of sex abuse of children
Instead, they said, with the church’s knowledge, Ensign Peak filed the forms through 13 shell companies they created, even as they maintained decision-making power. They also had “business managers,” most employed by the church, sign the required shell company filings.
“The Church was concerned that disclosure of its portfolio, which by 2018 grew to approximately $32 billion, would lead to negative consequences,” the agency said in a statement announcing the charges. . ." READ MORE
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"Is the Mormon Church honest in all of its dealings? The Securities and Exchange Commission announced charges against The Church of Jesus Christ of Latter-day Saints for obscuring the Church’s money and misstating Ensign Peak’s control over the Church’s investment decisions. To settle the charges, Ensign Peak agreed to pay a $4 million penalty and the Church agreed to pay a $1 million penalty.
SEC Order Against Ensign Peak Advisors & The Church of Jesus Christ of Latter-day Saints
If people want to help they can call the Senate finance committee and urge them to take action and have a hearing on this issue.
Senate Finance Committee phone: 202-224-4515
Senate Finance Committee fax: 202-228-0554
Religion Unplugged article with full Senate Finance Committee memo:
https://religionunplugged.com/news/2023/2/8/former-employee-of-ensign-peak-advisors-submits-document-to-senate-finance-committee
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