The US Securities and Exchange Commission has fined the Mormon church and a non-profit organisation that manages its $32bn equity portfolio over attempts to conceal the scale of its investments.
Ensign Peak Advisers, the investment firm owned by The Church of Jesus Christ of Latter-day Saints (LDS), failed to file quarterly investment disclosures known as 13F forms and set up more than a dozen shell companies to help hide the size of the church’s equity portfolio, according to a statement released by the US regulator on 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 Grewal, director of the SEC’s division of enforcement, said in a statement.
Ensign Peak has agreed to pay a $4mn penalty to settle the charges while the church will pay $1mn. Neither party admitted to any wrongdoing.
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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