Temple of the Church of Jesus Christ of Latter-day Saints in Kensington, Maryland, on April 18, 2022. “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 US Securities and Exchange Commission (SEC), said in a statement.
The church will pay $1-million to settle the allegations, with Ensign Peak’s portion $4-million.
The entity, commonly known as the Mormon church, and the investment arm didn’t admit to or deny the SEC’s allegations. The church said in a statement that it “regrets the mistakes made” and has taken steps to comply with SEC requirements.
The Wall Street Journal earlier this month reported that the church was under SEC investigation.
The SEC alleged that Ensign Peak failed to file the required forms, known as Form 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. The agency expressed concern about the reporting structure in June 2019, according to the church, and soon after Ensign Peak began filing a single report. Ensign Peak disclosed in its Form 13F that it managed more than $44-billion, with its biggest equity investments in Apple and Microsoft, at the end of 2022.
The church was concerned that the disclosure of the assets, in light of its size, would have negative consequences, according to the SEC. Members are expected to give 10% of their income to the church to remain in good standing, 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, according to the SEC, and invested the funds, and their returns, into stocks, bonds and real estate.
“All funds are invested solely to support the church’s mission,” according to its statement.