Ensign Peak Advisors Charged For Obscuring $32 Billion Church Portfolio
On February 21st, the Security Exchange Commission announced charges against the Church of Jesus Christ of Latter-day Saints, as well as the entity that manages its investments, Ensign Peak Advisors. Ensign Peak agreed to a $4 million penalty for failing to disclose its investments after creating 13 shell companies to obscure its portfolio. The LDS Church accepted a $1 million penalty for causing the infractions through its knowledge and approval of Ensign Peak’s failure to comply with SEC guidelines.
The Church of Jesus Christ of Latter-day Saints, commonly referred to as the LDS Church, is a Utah-based faith that has been criticized for its hefty investment portfolio in the past. A whistleblower in 2019 alleged that the Church had stockpiled $100 billion with the help of tithing earnings and donations in an investment portfolio.
According to the SEC, the investment manager likely turned to obscuring its holdings in fear of negative attention and consequences its sizable portfolio would bring, and by 2018, its holdings had already grown to a substantial $32 billion. Ensign Peak had not filed Forms 13F, which require investment managers to disclose the value of securities it manages, for 22 years between 1997 and 2019. Instead, Ensign Peak had created 13 Shell LLCs and filed forms 13F under these companies’ names, rather than under Ensign Peak’s own name. While the filings of these shell companies stated that each company had full control over its investments and voting, the SEC findings report that Ensign Capital retained both. Additionally, most of the “business managers” of these companies that signed the forms were employed by the LDS Church.
As stated by Gubir S. Grewal, the Director of the SEC's Division of Enforcement, “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.” Ensign Capital is registered as a non-profit, but as the manager of a large portfolio, it is still obligated to disclose the value of its holdings.
The LDS Church released a statement on the matter as well on February 21st, in which it addressed the charges levied. It states that Ensign Peak established the shell companies after it “received and relied upon legal counsel regarding how to comply with its reporting obligations while attempting to maintain the privacy of the portfolio,” and that it believes all of Ensign Peak’s securities were reported in the files 13F of the 13 LLCs. The release also made clear the church’s intentions to comply with all appropriate laws and regulations in the future.