The SEC’s order provides rare insight into how Ensign Peak, which is thought to manage more than $100bn on behalf of the Mormon church, seeks to keep its investments and their value hidden from public view.
The
Salt Lake City-based adviser, founded by the Mormon church in 1997,
created 13 shell companies with locations throughout the US. Between
1997 and 2019, these companies rather than Ensign Peak filed 13F forms,
according to the regulator.
“Ensign Peak developed its approach
to filing forms 13F in the names of these LLCs with the knowledge and
approval of the Church, which sought to avoid disclosure of the amount
and nature of its assets,” the order states.
The SEC pointed to interactions between Ensign Peak and senior
church leaders, including a plea for Ensign “to ensure that neither the
‘Street’ nor the media [could] connect the new entity to Ensign Peak”.
Ensign expressed concerns that the shell companies could “attract
unwanted attention” as their assets grew.
Ensign Peak, which
manages the money the Mormon church receives through donations, is
considered to be among the world’s largest investment vehicles. It
invests in a wide range of assets, including stocks, bonds and real
estate, but little else is known about its operations.
In a
statement addressing the SEC settlement, the church said “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.” It added that it regretted “mistakes made”.
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SEC Charges The Church of Jesus Christ of Latter-day Saints for Disclosure Failures
Church of Jesus Christ of Latter-day Saints, Its Investment Adviser Settle SEC Probe - Reddit
The SEC’s order provides rare insight into how Ensign Peak, which is thought to manage more than $100bn on behalf of the Mormon church, seeks to keep its investments and their value hidden from public view.
The Salt Lake City-based adviser, founded by the Mormon church in 1997, created 13 shell companies with locations throughout the US. Between 1997 and 2019, these companies rather than Ensign Peak filed 13F forms, according to the regulator.
“Ensign Peak developed its approach to filing forms 13F in the names of these LLCs with the knowledge and approval of the Church, which sought to avoid disclosure of the amount and nature of its assets,” the order states.
The SEC pointed to interactions between Ensign Peak and senior church leaders, including a plea for Ensign “to ensure that neither the ‘Street’ nor the media [could] connect the new entity to Ensign Peak”. Ensign expressed concerns that the shell companies could “attract unwanted attention” as their assets grew.
Ensign Peak, which manages the money the Mormon church receives through donations, is considered to be among the world’s largest investment vehicles. It invests in a wide range of assets, including stocks, bonds and real estate, but little else is known about its operations.
In a statement addressing the SEC settlement, the church said “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.” It added that it regretted “mistakes made”.
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SEC Charges The Church of Jesus Christ of Latter-day Saints for Disclosure Failures
SEC Charges The Church of Jesus Christ of Latter-day Saints for Disclosure Failures
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
Feds fine Mormon church $5M for hiding $32B using shell companies
SALT LAKE CITY (KUTV) — The Church of Jesus Christ of Latter-day Saints in conjunction with its investment management company agreed to pay a combined $5 million Tuesday to settle charges placed upon the religious organization by the Security and Exchange Commission concerning the church's previous failure to accurately report on its multibillion-dollar stock portfolio.
According to the order of cease-and-desist issued by the SEC Feb. 21, Ensign Peak Advisers Inc., a Church of Jesus Christ of Latter-day Saints organization created to manage the Church's investments, deceived benefactors along with the public as a whole by failing to file forms which would have disclosed the Church's equity investments between 1997 and 2019. The investment portfolio had reportedly reached $32 billion by 2018.
Rather than filing forms with the SEC in the company's name, court documents stated that Ensign Peak would file its 13F forms under a different Limited Liability Company created by The Church in order to "avoid disclosure of the amount and nature of its assets."
In the settlement reached Tuesday, the church agreed to pay forth $1 million while Ensign Peak agreed on $4 million.
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, Director of the SEC’s Division of Enforcement was quoted saying in a statement issued by the SEC Tuesday. “The requirement to file timely and accurate information on Forms 13F applies to all institutional investment managers, including non-profit and charitable organizations," he added.
Church leaders confirmed that Ensign Peak has corrected its reporting approach since 2019 in a statement issued Tuesday, writing, "In June 2019, the SEC first expressed concern about Ensign Peak’s reporting approach. Ensign Peak adjusted its approach and began filing a single aggregated report. Since that time, 13 quarterly reports have been filed in full accordance with SEC requirements."
The statement continued, reading, "This settlement relates to how the forms were filed previously. Ensign Peak and The Church have cooperated with the government over a period of time as we sought resolution. We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed."
FULL CHURCH STATEMENT:
"The Church of Jesus Christ of Latter-day Saints and its affiliated investment manager, Ensign Peak Advisors, Inc., have settled a matter with the Securities and Exchange Commission (SEC).
"Investment managers who oversee a portfolio of public equities above a certain threshold are required to file Forms 13F with the SEC quarterly. These forms publicly disclose the names of the securities and their values.
"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. As a result, Ensign Peak established separate companies (LLCs) that each filed Forms 13F instead of a single aggregated filing. Ensign Peak and the Church believe that all securities required to be reported were included in the filings by the separate companies.
"In June 2019, the SEC first expressed concern about Ensign Peak’s reporting approach. Ensign Peak adjusted its approach and began filing a single aggregated report. Since that time, 13 quarterly reports have been filed in full accordance with SEC requirements.
"This settlement relates to how the forms were filed previously. Ensign Peak and the Church have cooperated with the government over a period of time as we sought resolution.
"We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed."
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Church of Jesus Christ of Latter-day Saints, Its Investment Adviser Settle SEC Probe
Ensign Peak Advisors filed forms that obscured the church’s investments in a $44 billion U.S. equities portfolio, SEC says
WASHINGTON—Ensign Peak Advisors Inc., which oversees a $44 billion U.S. equities portfolio for the Church of Jesus Christ of Latter-day Saints, will pay $4 million to settle regulatory claims that the money manager obscured the church’s investment holdings.
The Mormon Church will also pay a $1 million fine, the Securities and Exchange Commission said Tuesday. The money manager and the church settled the SEC’s investigation without admitting or denying wrongdoing.
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