Ensign Peak SEC Investigation confirmed

[Marcus]

What a rabbit hole this is.

Evidently, Ensign Peak's use of many shell companies to keep its stock market activities secret would have worked for far longer, except for one tiny detail. That detail being "execution." It truly is worthy of an SNL-type sketch.

Ensign Peak's leadership, at some point in 2011, ordered the creation of several LLCs to use for holding stocks. This was in response to intense media attention following Mitt Romney's rise to the top of the 2012 GOP ticket, and the fresh runaway success of the Book of Mormon Musical. Together, known as the "Mormon Moment" for those of us with short memories.

I guess the thinking went, many funds would be harder to trace back to the church than a single fund, and discovery of any single fund wouldn't betray the sum total of LDS church investments in the stock market anyway. You have to assume this plan was approved by the first presidency, because the FP is the primary policy setter for Ensign Peak. Permission in hand, execution would require help -- uninformed help, mind you -- from Legal (setting up the corporations, designating officers, etc) and IT (setting up web pages, email addresses, etc).

And that's where the SNL sketch comes in. First, Legal -- being Mormon -- created all of the LLCs on the same date. One, and done. Efficient. Orderly. Can you hear the phone call? "It's done, sir. All of them. Signed and delivered." Then secondly, church IT staff -- also being Mormon -- created all of the phony web pages on the same day. Boom. Let's go! Not only that, but those pages were all hosted on the SAME servers that hosted the LDS.org website. Save a few dollars on setup fees - why not? We saved $25 in setup fees, times 14 LLCs, for Jesus. High-fives! All around, pure Brighamite Mormonism in action. Orderly. Efficient. Done.

So fast forward to 2018. Someone sniffing around finds 14 LLCs, with billions in stockholdings apiece ($32 billion in all), all founded on the same date, with websites all created on the same date and hosted on the same server cluster as LDS.org, where a bunch of them have designated officers who strangely appear to be Church employees. And that led to this bombshell -- MormonLeaks, 2018.

https://mormonleaks.io/newsroom/2018/05 ... vestments/

I bet our Doctor Scratch could compose a brilliant 5 minute SNL-like sketch of this comedic backfire. It is a story that should be told, eventually. Or perhaps the Midnight Mormons would like to re-invent their video satire careers? Would be fun to see Midnight Mormons present MEEP: MEet Ensign Peak!

Wow. That was fascinating to read, thank you. Combined with the Widow's Mite graphic, that really tells the story. And the look for the lds leadership is really, really bad.

[Dr Moore]

In the military, they call this “friendly fire.”

[sock puppet]

https://www.wsj.com/articles/Mormon-chu ... ec-dca77f9

Article just popped up, front page Wall Street Journal.

Since it is paywalled, the relevant part is here.

The Securities and Exchange Commission is investigating the Mormon Church’s past efforts to keep its giant investment portfolio a secret, a practice that ended after a former employee revealed in 2019 that the church had amassed $100 billion of holdings.

The SEC’s investigation has focused on whether the Church of Jesus Christ of Latter-day Saints, also known as LDS, complied with disclosure requirements for large money managers. It is at an advanced stage and is likely to lead to a settlement in the coming months, people familiar with the matter said.

The SEC historically has punished violations of money-manager reporting rules by levying fines. The size of the fine being sought by the SEC’s enforcement staff couldn’t be learned.

Rest of the article rehearses the 2019 whistleblower leak, and the various denials by leaders of Ensign Peak ("We follow the law, etc etc.")

Seems to be the WSJ rushed the scoop without getting comments from Ensign Peak or Church leaders. A few days-old quotes related to Neilsen's 90-page senate submission earlier this week.

Will be interesting if Ensign Peak's settlement comes with forced admission of wrongdoing. I would imagine so, to avoid penalties associated with an enforcement action. The SEC is no joke when it dials up an enforcement process.

"breakin' the law, breakin the law"--oh, what did the 12th Article of Faith provide: "We believe in being subject to kings, presidents, rulers, and magistrates, in obeying, honoring, and sustaining the law." Maybe Dallin Oaks can dazzle us with some of his legal brilliance and explain how breaking the law is not necessarily anathemic to "obeying, honoring, and sustaining the law."

[Dr Moore]

The SEC case was settled for $5M. $4M from Ensign Peak, $1M from the Church.

The fine itself looks immaterial relative to the confession. Both the fund and the church are not able to claim innocence.

https://www.wsj.com/articles/church-of- ... lista_pos3

Church PR here:
https://newsroom.churchofjesuschrist.or ... settlement

Q: Did Ensign Peak fail to comply with SEC regulations?

A: We reached resolution with the SEC. We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed.

This is a weasel-worded admission of guilt.

[Tom]

Link to the SEC press release and order (possibly linked in the WSJ article): https://www.sec.gov/news/press-release/2023-35

[Marcus]

Link to the SEC press release and order (possibly linked in the WSJ article): https://www.sec.gov/news/press-release/2023-35

from tom's link

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. According to the order, the Church was concerned that disclosure of its portfolio, which by 2018 grew to approximately $32 billion, would lead to negative consequences. To obscure the amount of the Church’s portfolio, and with the Church’s knowledge and approval, Ensign Peak created thirteen shell LLCs, ostensibly with locations throughout the U.S., and filed Forms 13F in the names of these LLCs rather than in Ensign Peak’s name. The order finds that Ensign Peak maintained investment discretion over all relevant securities, that it controlled the shell companies, and that it directed nominee “business managers,” most of whom were employed by the Church, to sign the Commission filings. The shell LLCs’ Forms 13F misstated, among other things, that the LLCs had sole investment and voting discretion over the securities. In reality, the SEC’s order finds, Ensign Peak retained control over all investment and voting 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.”

bolding added.

Wow. that is a substantial amount of dishonesty. for which the lds cult paid a fine amounting to about 2 hours worth of interest they collect on these ill-gotten gains.

[malkie]

The SEC case was settled for $5M. $4M from Ensign Peak, $1M from the Church.

The fine itself looks immaterial relative to the confession. Both the fund and the church are not able to claim innocence.

https://www.wsj.com/articles/church-of- ... lista_pos3

Church PR here:
https://newsroom.churchofjesuschrist.or ... settlement

Q: Did Ensign Peak fail to comply with SEC regulations?

A: We reached resolution with the SEC. We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed.

This is a weasel-worded admission of guilt.

"Mistakes were made"

I wonder if they have a "Tricky Dicky" on staff

[Dr Moore]

Wow. that is a substantial amount of dishonesty. for which the lds cult paid a fine amounting to about 2 hours worth of interest they collect on these ill-gotten gains.

Indeed. As I said earlier, an SEC action is no joke. You give them what they ask for, you comply with their demands, and you do not make light of the violations. By making the church (not just Ensign Peak) pay a penalty and be listed as a violator is far more costly than the fine anyway.

I also wonder, and am asking around, since this happened from 1997 to 2019... a large fund like Ensign Peak can move markets when it buys and sells. Failure to disclose might be argued as a basis for class action litigation if other shareholders can argue harm on the basis Ensign Peak somehow influenced a stock price illegally. Maybe low odds, but then again it appears Ensign Peak owns a high percentage of some stocks and as noted upthread, is big enough to be listed as a top 100 shareholder in the 10 largest companies in America. That large of a shareholder is bound to have moved a few stocks, such as by selling a position in stocks that other holders might not have continued owning (for whatever reason) if they knew Ensign Peak was a large holder. You never know... securities litigation happens over much smaller things.

[Fence Sitter]

I wonder if any of the shell companies were named "Secret Combination"?

[Marcus]

Wow. that is a substantial amount of dishonesty. for which the lds cult paid a fine amounting to about 2 hours worth of interest they collect on these ill-gotten gains.

Indeed. As I said earlier, an SEC action is no joke. You give them what they ask for, you comply with their demands, and you do not make light of the violations. By making the church (not just Ensign Peak) pay a penalty and be listed as a violator is far more costly than the fine anyway.

Good point, it's interesting that they actually went beyond the fund to the lds church to assess fines. the lds church non-apology was a lesson in bad PR.

I also wonder, and am asking around, since this happened from 1997 to 2019... a large fund like Ensign Peak can move markets when it buys and sells. Failure to disclose might be argued as a basis for class action litigation if other shareholders can argue harm on the basis Ensign Peak somehow influenced a stock price illegally. Maybe low odds, but then again it appears Ensign Peak owns a high percentage of some stocks and as noted upthread, is big enough to be listed as a top 100 shareholder in the 10 largest companies in America. That large of a shareholder is bound to have moved a few stocks, such as by selling a position in stocks that other holders might not have continued owning (for whatever reason) if they knew Ensign Peak was a large holder. You never know... securities litigation happens over much smaller things.

Very interesting, let us know what you find out.