‘Regret mistakes made’: LDS Church fined $5 million over SEC violations

ST. GEORGE — The U.S. Securities and Exchange Commission announced Tuesday that it had fined The Church of Jesus Christ of Latter-day Saints and its investment arm $5 million for failing to disclose the full extent of the church’s investments.

In this file photo, the top of the Salt Lake Temple is silhouetted against a cloud-covered sky, at Temple Square in Salt Lake City, Utah on Feb. 6, 2013 | Photo by Rick Bowmer, The Associated Press, St. George News

According to a statement from the SEC issued Tuesday, the church and its affiliated, nonprofit investment manager Ensign Peak are accused of “failing to file forms that would have disclosed the Church’s equity investments” and “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 further states that between 1997 and 2019, Ensign Peak failed to file forms that are required to show the value of certain investments being managed by the nonprofit. The church is said to have been concerned that disclosure of the portfolio’s value – which was up to $32 billion by 2018 – would “lead to negative consequence.”

In order to keep that amount undisclosed, the SEC said that Ensign Peak, “with the Church’s knowledge and approval,” created 13 shell companies and filed forms under those companies rather than as Ensign Peak. These companies, the SEC states, were used to misstate who had control over the investments. Instead of the shell companies, the SEC found that 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,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in Tuesday’s statement from the federal agency.

For the reporting violations, Ensign Peak was fined $4 million while the church was fined $1 million.

“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,” the SEC said.

In this file photo, people attend The Church of Jesus Christ of Latter-day Saints twice-yearly conference, Salt Lake City, Utah, April 2, 2022 | AP Photo by Rick Bowmer, St. George News

The church also issued a statement Tuesday, stating that it had previously relied on legal counsel regarding how its investments should be filed and acted accordingly by creating the separate companies. That practice ended after the SEC “expressed concern” about it.

“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.,” the church statement reads. “Since that time, 13 quarterly reports have been filed in full accordance with SEC requirements … Ensign Peak and the Church have cooperated with the government over a period of time as we sought resolution.”

The church’s investment arm has come under scrutiny in recent years since a whistleblower went to the IRS in 2019 with accusations of the church hoarding up to $100 billion in donations that were otherwise meant for charitable use.

The LDS church maintains billions of dollars of investments in stocks, bonds, real estate and agriculture with Ensign Peak managing the majority of it. It is overseen by ecclesiastical leaders within the church known as its presiding bishopric.

While the church stated it “regrets mistakes made” regarding the SEC violations, it remains committed to complying with the law, and now considers “this matter closed.”

The Associated Press contributed to this article.

Copyright St. George News, SaintGeorgeUtah.com LLC, 2023, all rights reserved.

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