Mormon church fined over scheme to cover $32 billion funding fund behind shell corporations

The Church of Jesus Christ of Latter Day Saints and a nonprofit entity that it managed have been fined $5 million by the Securities and Change Fee over accusations that the spiritual establishment did not correctly disclose its funding holdings.

In an order launched Tuesday, the SEC alleged that the church illicitly hid its investments and their administration behind a number of shell corporations from 1997 to 2019. In doing so, it did not disclose the dimensions of the church’s fairness portfolio to the SEC and the general public.

The church was involved that disclosure of the property within the identify of the nonprofit entity known as Ensign Peak Advisors, which manages the church’s investments, would result in adverse penalties in mild of the dimensions of the church’s portfolio, the SEC mentioned.

The revelation of the illicit shell firm construction dates again to 2018, when a gaggle previously known as MormonLeaks and now often called the Reality and Transparency Basis alleged that the extent of the church’s investments had reached $32 billion that yr.

The next yr, a whistleblower filed a criticism to the Inner Income Service, in keeping with a 2020 Wall Road Journal report; that yr, the newspaper mentioned the church’s holdings had grown to $100 billion.

“For greater than half a century, the Mormon Church quietly constructed one of many world’s largest funding funds,” the Journal mentioned. “Nearly nobody exterior the church knew about it.”

The SEC accused the church Tuesday of going to “nice lengths” to keep away from disclosing its investments and, in doing so, “depriving the fee and the investing public of correct market info.”

“The requirement to file well timed and correct info on Varieties 13F applies to all institutional funding managers, together with non-profit and charitable organizations,” mentioned Gurbir S. Grewal, director of the SEC’s Division of Enforcement, in an announcement.

In an announcement, the church mentioned that, beginning in 2000, its Ensign Peak funding administration group “obtained and relied upon authorized counsel relating to how one can adjust to its reporting obligations whereas making an attempt to take care of the privateness of the portfolio.”

Because of this, it mentioned, Ensign Peak established “separate corporations” that every filed required disclosure types, as a substitute of a single aggregated submitting.

“Ensign Peak and the Church consider that each one securities required to be reported have been included within the filings by the separate corporations,” it mentioned.

After the SEC expressed concern about Ensign Peak’s reporting strategy in June 2019, the church mentioned, Ensign Peak “adjusted its strategy and started submitting a single aggregated report.”

Since that point, the church mentioned, it had filed 13 quarterly reviews in accordance with SEC necessities.

“This settlement pertains to how the types have been filed beforehand,” the church mentioned. “Ensign Peak and the Church have cooperated with the federal government over a time period as we sought decision. We affirm our dedication to adjust to the regulation, remorse errors made, and now think about this matter closed.”