Mormon church, investment manager pay $5 million to settle SEC claim

The Church of Jesus Christ of Latter-day Saints and its investment arm, Ensign Peak Advisers Inc., agreed to pay a total of $5 million to settle a U.S. regulator’s allegations that it failed to file proper disclosures and obscured the church’s massive investment portfolio.

“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, enforcement director for the Securities and Exchange Commission, said in a statement. 

The church will pay $1 million to settle the allegations, and Ensign Peak, $4 million.

The entity, commonly known as the Mormon church, and its investment arm didn’t admit to or deny the SEC’s allegations. The Wall Street Journal earlier this month reported that the church was under SEC investigation.

APPLE INVESTMENT

The SEC alleged that Ensign Peak failed to file the required forms, known as 13Fs, in Ensign Peak’s name, which would have disclosed the church’s investments to the public. Instead, the church and the investment manager created 13 limited liability corporations to obscure the church’s portfolio, the regulator alleged.

The church had knowledge of and approved this tactic, the SEC said. As of December, Ensign Peak disclosed that it managed $44 billion, with its biggest investments in Apple Inc. and Microsoft Corp.

The church was concerned that the disclosure of the assets, in light of its size, would have negative consequences, according to the SEC. Members of the LDS Church are expected to give 10% of their income to the church to remain in good standing, in a process known as tithing.

Excess tithes were invested by Ensign Peak, according to the SEC’s complaint. Ensign Peak charged the church no management fees, per the SEC, and invested the funds, and their returns, into equities and debt. 

The church issued a statement noting that the SEC allegations covered the period from 1997 through 2019. In 2019, the SEC expressed concerns about Ensign Peak's reporting, and the church said that Ensign Peak has filed "in full accordance with SEC requirements" since 2019.

"We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed," the church said in the statement.

[More: SEC proposes expanding advisor custody rule]