Church of Jesus Christ of Latter-day Saints to pay $5M in government penalties

The Church of Jesus Christ of Latter-Day Saints' temples and offices dot the Salt Lake City landscape. Photo: Ismael Paramo.

SALT LAKE CITY — On Tuesday, the Securities and Exchange Commission (SEC) announced charges against Ensign Peak Advisers Inc. The non-profit entity is operated by The Church of Jesus Christ of Latter-day Saints (LDS) to manage its investments.

The charges against Ensign Peak Advisers are 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.

Additionally, the SEC has also filed charges against the LDS Church for causing the initial two violations.

To settle these charges, Ensign Peak has agreed to pay a $4 million penalty, and the LDS Church has agreed to pay a $1 million penalty.

“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, said in a press release. “The requirement to file timely and accurate information on Forms 13F applies to all institutional investment managers, including non-profit and charitable organizations.”

The SEC’s order found that Ensign Peak did not file Forms 13F, which investment managers are required to disclose the value of certain securities they manage, from 1997 through 2019.

According to the order, the LDS Church was concerned that disclosing its portfolio, which totaled $32 billion in 2018, would lead to “negative consequences.”

With the LDS Church’s approval, Ensign Peak created 13 shell LLCs with locations throughout the U.S. The company then filed Forms 13F in the names of these LLCs to hide the amount in the LDS Church’s portfolio.

“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,” said a statement from the SEC. “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.”

Ensign Peak and the LDS Church have agreed to settle the SEC’s allegations.

According to a statement from the LDS Church, Ensign Peak initially formed the shell LLCs in accordance with legal council the non-profit has received and relied upon since 2000 to “comply with its reporting obligations while attempting to maintain the privacy of the portfolio.”

The statement goes on to say that Ensign Peak began filing a single report in 2019 after the SEC first expressed concern over the entity’s reporting approach and that the LDS Church has since been in full compliance with SEC requirements.

“This settlement relates to how the forms were filed previously,” said a statement from the LDS Church. “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.”