The SEC has charged the Church of Jesus Christ of Latter-day Saints and its investment firm Ensign Peak Advisers Inc. with disclosure failures and misstatement of filings. Ensign Peak, a non-profit entity operated by the Church to manage its investments, failed to file forms that would have disclosed the Church’s equity investments. It also failed to correctly file forms for the shell companies that obscured the Church’s portfolio and therefore misstated its control over the Church’s investment decisions. The SEC has also charged the Church for causing these violations.

The SEC found that Ensign Peak failed to file Forms 13F for over 20 years, from 1997 through 2019, and failed to disclose required information on which investment manager that was handling certain securities.

“The requirement to file timely and accurate information on Forms 13F applies to all institutional investment managers, including non-profit and charitable organizations.”

Gurbir S Grewal, Director, SEC Division of Enforcement

Forms 13f

According to the order, the Church portfolio grew to approximately $32bn in 2018, and there was concern that disclosure of this could lead to negative consequences. To mask the amount, Ensign Peak created 13 shell LLCs throughout the US. However, the company filed the Forms 13F in the names of these LLCs instead of in Ensign Peak’s name – which was all done with the Church’s knowledge and approval.

Even after setting up the shell companies, the SEC found that Ensign Peak maintained investment discretion over all relevant securities, and that it controlled the LLC’s and directed nominee “business managers” to sign the Commission filings. The Forms 13F also stated that all shell LLCs had sole investment and voting discretion over the securities. In reality, Ensign Peak kept control over all 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,” said Gurbir S Grewal, Director of the SEC’s Division of Enforcement. “The requirement to file timely and accurate information on Forms 13F applies to all institutional investment managers, including non-profit and charitable organizations.”

To settle the charges, Ensign Peak has agreed to pay a $4m penalty and the Church has a agreed to pay a $1m penalty. In the settlement, Ensign Peak has agreed it violated Securities Exchange Act Section 13(f) and Rule 13f-1 by failing to file Forms 13F, and that it misstated information in set forms. The Church has agreed causing Ensign Peak’s violations through knowledge and approval of its use of the shell LLCs.