The Securities and Exchange Commission said Tuesday that it has charged Ensign Peak Advisors, a nonprofit entity operated by The Church of Jesus Christ of Latter-day Saints, with failing to file forms to disclose the church's equity investments and creating shell companies to obscure the church's portfolio as well as misstating Ensign Peak's control over the church's investment decisions.
The SEC also announced charges against the church for causing these violations.
To settle the charges, Ensign Peak — which manages the assets, including the investment securities, of the church — agreed to pay a $4 million penalty and the Church agreed to pay a $1 million penalty.
The SEC's order finds that, from 1997 through 2019, Ensign Peak failed to file Forms 13F, the forms on which investment managers are required to disclose the value of certain securities they manage.
Instead, "the Church and Ensign Peak created thirteen limited liability corporations, including twelve similar LLCs with addresses located throughout the U.S., for the sole purpose of filing Forms 13F and preventing public disclosure by Ensign Peak of the Church's equity securities holdings," according to the SEC.
"The Forms 13F that Ensign Peak filed in the names of these LLCs misstated, among other things, that they had sole investment and voting discretion over the listed securities, when Ensign Peak at all times retained discretion over all investment decisions," the SEC order states.
Ensign Peak "developed its approach to filing Forms 13F in the names of these LLCs with the knowledge and approval of the Church, which sought to avoid disclosure of the amount and nature of its assets," the SEC order said.
"Through their institutionalized use of this approach for almost twenty years, Ensign Peak's significant role in the securities markets as an institutional investment manager was not disclosed to the Commission, the markets, and the investing public as required by Section 13(f) of the Exchange Act and Rule 13f-1 thereunder," the SEC said.
