Mormon Church Settle Sec Probe For $5 Million‍

The Church of Jesus Christ of Latter-day Saints and the investment arm of the church, Ensign Peak Advisers Inc., have agreed to pay a total of $5 million to settle allegations that they failed to provide proper disclosures and concealed the church's vast investment portfolio to US regulators.

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In a statement, Gurbir Grewal, enforcement director for the US Securities and Exchange Commission, alleges that the LDS Church's investment manager, with the Church's knowledge, avoided disclosing the Church's investments, thereby depriving investors and the commission of accurate market information. 

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There will be a $1 million settlement paid by the church, and $4 million will be paid by Ensign Peak as part of the settlement.

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Neither the entity, commonly known as the Mormon church nor the investment arm of the church acknowledged nor denied the SEC's allegations. Both Ensign Peak and the church did not immediately respond to a request for comment. The SEC was investigating the church, according to Trade Algo earlier this month.

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Apple Investment 

In response, the Securities and Exchange Commission (SEC) alleged that Ensign Peak had failed to file on behalf of the church the necessary forms, also known as 13Fs, which would have made the church's investments public. Instead of disclosing the church's portfolio to investors, the church and the investment manager created 13 limited-liability corporations to hide the church's holdings, according to the regulator. 

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There was knowledge of and approval of this tactic by the church, the SEC said. As of December, Ensign Peak disclosed that it managed $44 billion, with Apple Inc. and Microsoft Corp. being its two biggest investments, respectively. 

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Considering the size of the church, the SEC feared the negative consequences of disclosing its assets. To remain in good standing, it is expected that members of the LDS Church contribute 10% of their income to the church in order to remain in good standing. This process is referred to as tithing. 

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SEC has filed a complaint against Ensign Peak alleging that excess tithes were invested by Ensign Peak. In accordance with the SEC, Ensign Peak did not charge the church any management fees and invested the funds, as well as their returns, into equities and debt securities.