The Securities and Exchange Commission released an order on Tuesday, fining the Church of Jesus Christ of Latter-day Saints $5 million after it was accused of not disclosing its investments properly.
The order from the SEC names the church, and Ensign Peak Advisors, a nonprofit entity it controlled, alleging that it illicitly hid its investments and their management from 1997 to 2019 behind shell companies.
By doing this, the allegations say the church failed to properly disclose the size of its equity portfolio to the SEC and the public.
Truth and Transparency Foundation, a group formally known as MormonLeaks, first began reporting on the church using shell companies to hide how big its portfolio had grown.
The group claimed in 2018 that the investments from the church had topped out at over $32 billion.
The SEC shared in its order that the church hid the size of its investments through its nonprofit, because it thought it would lead to negative consequences if it was made public how big it had gotten.
In 2020, The Wall Street Journal published a report following the Truth and Transparency Foundation report.
“For more than half a century, the Mormon Church quietly built one of the world’s largest investment funds. Almost no one outside the church knew about it,” the Journal report said.
The Journal alleged in its report that the church’s holdings had surpassed $100 billion and that a whistleblower had filed a complaint with the Internal Revenue Service, tipping them off to the possible mishandling of disclosures.
Now the SEC alleges the church took extraordinary measures to ensure its investments were not disclosed to the commission or the public.
The church released a statement, saying that in 2000, its Ensign Peak investment management group ”received and relied upon legal counsel regarding how to comply with its reporting obligations while attempting to maintain the privacy of the portfolio.”
It claims that the nonprofit created separate companies, all of which filed independent disclosure forms as required instead of as a single filing under the church.
“Ensign Peak and the Church believe that all securities required to be reported were included in the filings by the separate companies,” the church said in its statement.
Still, the SEC questioned the filing strategy in June 2019, resulting in Ensign Peak changing its practices to file “a single aggregated report.”
Gurbir Grewal, the director of the SEC’s Division of Enforcement, shared a statement following the release of the order. In it, he said that nonprofits like the church are not exempt from disclosing investment information.
“The requirement to file timely and accurate information on Forms 13F applies to all institutional investment managers, including non-profit and charitable organizations,” Grewal said.
Since June 2019, the church says it has filed 13 quarterly reports, all following the guidelines and requirements of the commission.
“This settlement relates to how the forms were filed previously,” the church said. “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.”
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