Mormon church, investment company to pay $5M for misleading publicPosted On: Feb. 21, 2023 2:25 PM CST
(Reuters) — The Church of Jesus Christ of Latter-day Saints and its investment management company have agreed to pay a combined $5 million to settle charges they previously hid the church’s multibillion-dollar stock portfolio from the public, the Securities and Exchange Commission announced on Tuesday.
The markets watchdog said the church and its nonprofit investment company, Ensign Peak Advisers Inc., used shell companies to mask its growing investments in public companies, which reached $32 billion in 2018, due to concerns of negative publicity.
The use of shell companies came to light in 2019, when a former employee of Ensign Peak filed a whistleblower complaint.
From 1997 through 2019, those shell companies filed mandatory forms detailing the investments and improperly claimed to operate independently. In reality, the investments were still controlled by Ensign Peak, and the church was aware of the arrangement with church employees heading most of the companies, according to the SEC.
In a statement, the church said it had relied on legal counsel in creating an arrangement to allow reporting while maintaining “the privacy of the portfolio.” It said it halted the practice after the SEC raised concerns with it in 2019, and cooperated with its investigation.
“We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed,” the church said.
The church agreed to pay $1 million, while Ensign Peak will pay $4 million to settle charges.
“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.