Church fined by SEC

[smac97]

10 hours ago, Calm said:

Quote

So either the Church received bad legal advice, or else the legal advice it did receive was not fully followed (as indicated by the failure to transfer "operational investment discretion" to the LLC).

Does Ensign Peak or any church company have full operational investment discretion?

At this point?  I would assume so.

Thanks,

-Smac

[smac97]

9 hours ago, Calm said:

Quote

I respectfully disagree with bsjkki's comment above ("Setting up shell llc's is a very bad look").  Setting up LLCs is an entirely mundane, and generally quite prudent, business practice, asset management and protection strategy, and privacy strategy.  

Why is it prudent business practice?

For a variety of reasons.  

First of all, setting up an LLC is legal.  Indeed, the act involves registering with and providing information to the State.

Second, there are a variety of benefits to setting up an LLC.  It creates a separate legal identity.  It limits liability.  It exists perpetually until dissolved.  It has a flexible management structure (with minimal "corporate formalities").  It facilitates privacy.  Pass-through taxation.

Third, LLCs are a very common type of business organization.  It works for small businesses (such as my one-man-band law firm) and for larger ones (Amazon, for example, is an LLC).

Thanks,

-Smac

[smac97]

8 hours ago, Teancum said:

Quote

This something that I'm confused about. From the order, it says it is a settlement and that they don't admit wrong doing:

In anticipation of the institution of these proceedings, Respondents have submitted Offers of Settlement (the “Offers”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over them and the subject matter of these proceedings, which are admitted, Respondents consent to the entry of this Order...

But then later in the order, it says they will pay a "civil money penalty".

Nobody pays the SEC a settlement. 

Um, if the Church's "Offer of Settlement" was to pay a fine, and if the SEC "has determined to accept" that Offer, then . . .

8 hours ago, Teancum said:

It was likely a negotiated fine that was settled on. 

Well, yes.

8 hours ago, Teancum said:

I have some experience in advising a business on an SEC issue but I am not at liberty to talk about it. But essentially it was the SEC saying "you can fight this but this is what happens if you lose and it is really not nice for you.  But pay is this fine/penalty and we will leave you alone.

That has a whiff of Don Corleone to it.

Thanks,

-Smac

[smac97]

8 hours ago, ttribe said:

The final legal violation is that Form 13-F wasn't being properly filed in the name of Ensign Peak. This violation flows directly from setting up shell companies which were still 100% controlled by Ensign Peak, rather than self-directed. Those are the technical elements.

The SEC documents key findings of its investigation in its Order (which I recommend reading in its entirety) that show the specific intent and knowledge of leadership. Those are the factors which I believe result in the SEC deciding to file charges against both Ensign Peak and the Church. They are, IMO, aggravating factors that led to the formal charges.

Again, it is my understanding that the SEC Order contains allegations, that is, "claim{s} of fact not yet proven to be true."

And the word "charge" or "charges" appears exactly zero times in the SEC Order.

Thanks,

-Smac

[smac97]

7 hours ago, Teancum said:

Quote

They fixed it when the SEC decided it was a problem. 

That's their right as a regulatory agency, of course, but this seems to be a case of regulatory discretion going one way as opposed to another.

The SEC does not just decide something is a problem.  There are rules and regulations in this space.

The SEC alleged there was a problem, and the Church - without admitting or denying the SEC's findings - agreed to settle the matter by paying a fine. 

Thanks,

-Smac

[smac97]

8 hours ago, provoman said:

Did the SEC use the term "lied" or is that your editorial?

His editorial gloss.  His embellishment.

Edited February 22, 2023 by smac97

[smac97]

7 hours ago, CV75 said:

@SteveOand @smac97, I appreciate your remarks. Given that the Church only settled an allegation with a fine, the whole affair seems to be a matter of ethicality over morality, having to do with enforcing rules and regulations since the SEC does not have criminal authority.

I think this matter has more to do with regulatory compliance, and less with "morality" or "ethics."

The Church and its members have a moral obligation to obey the law, but many laws don't have much in the way of a "moral" or "ethical" dimension.  They are just regulatory, malum prohibitum-style mechanisms for the State to manage the behavior of private citizens, and its interactions with them, and ensure compliance with the Constitution and other provisions of the law.

7 hours ago, CV75 said:

I do not see this incident as an indicator of general apostasy or leadership abusing of the keys of the kingdom.

Nor I.  As soon as the critics who are carping on this issue start publishing the entirety of their finances and asset holdings, I'll start giving them a bit more of a listen.  Until then...

Thanks,

-Smac

[smac97]

7 hours ago, ttribe said:

The SEC highlights the ways in which the filings were incorrect. I think it's hard to argue that they were being honest on those filings.

"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." (emphasis mine)

Again, it is my understanding the SEC Order included allegations, that is, "claim{s} of fact not yet proven to be true."

I think it's hard to make broad conclusions about "honesty" based on unsubstantiated and unproven allegations.

Thanks,

-Smac

[smac97]

7 hours ago, Analytics said:

According to the SEC report, the First Presidency approved of this scheme and neither Ensign Peaks nor the Presiding Bishopric had the authority to change it without the First Presidency's approval.

"Scheme."  Yet another word that appears nowhere in the SEC Order, and is instead an editorial gloss and embellishment by you.

Thanks,

-Smac

Edited February 22, 2023 by smac97

[The Nehor]

Welp, pack it in. The Restoration was destroyed by a *checks notes* administrative fine from the Security and Exchange Commission.

If you reread Revelation you will see this was clearly prophesied in advance.

[smac97]

7 hours ago, Analytics said:

The SEC's term for "lying" is "misstating", and that is one of the things they were sanctioned for:

36. As a result of the conduct described above, Ensign Peak violated Section 13(f)(1) of the Exchange Act and Rule 13f-1 thereunder by failing to file Forms 13F in Ensign Peak’s name. Ensign Peak also violated Section 13(f)(1) of the Exchange Act and Rule 13f-1 thereunder by filing misstated Forms 13F in the names of LLCs created for the sole purpose of filing Forms 13F.

37. As a result of the conduct described above, the Church caused Ensign Peak’s violations of Section 13(f)(1) of the Exchange Act and Rule 13f-1 thereunder.

No, "lying" is your term for "misstating."  Your embellishment.  Your editorializing.

"Misstatement," meanwhile, apparently has a formal definition in this context.

Thanks,

-Smac

[smac97]

6 hours ago, Calm said:

https://publicsquaremag.org/faith/church-state/ensign-peak-clarifying-the-sec-announcement/

Thank you for sharing this.  Some key bits:

Quote

Did Ensign Peak Advisors ever hide its stock holdings?

There are no allegations that they did. Each of EPA’s subsidiaries reported their holdings. So all of the fund’s holdings were disclosed through form 13F reports for each individual affiliated entity. EPA and the Church have stated that they believe all of their holdings were reported. 

Were the “shell companies” the EPA used illegal?

There’s no allegation that they were. These companies are the subsidiary LLCs that EPA used to reorganize in 2000. Most shell companies are used for legitimate purposes, particularly in the financial sector. They can be used to legitimately maintain the privacy of investors or better organize financial assets. The SEC’s claim is not that EPA’s organizational scheme was fraudulent, but that using that organization, EPA should have reported differently than they did.

If nothing was hidden and the organization was legal, why was the SEC concerned?

Because the subsidiaries were all under the control of EPA the SEC believed they needed to file one joint form 13F.

No accusations have been made that EPA abused the separate filings to gain advantage, but the separate filings could in theory have made it possible to do so.
...

Is getting fined by the SEC a big problem for an investment fund or relatively common?

Obviously, a fund never wants to be fined. But fines like this are common. About 5% of investment funds are fined by the SEC each year. Experts compare it to a traffic ticket.

These kinds of investigations are also especially common when multiple entities are involved, such as in the case of the EPA. 
...

Does the evidence suggest that Ensign Peak Advisors purposely violated the SEC’s disclosure requirements? Are Ensign Peak Advisors and/or the Church of Jesus Christ culpable for breaking the law?

The SEC’s announcement included nothing of the sort. And these regulations don’t really work that way. As this same lawyer said, “Yes, there are rules that dictate how money managers disclose the existence of funds. But there is no culpability requirement to trigger a penalty or a violation of these rules. Sometimes mistakes are made, and often inadvertently are, but that doesn’t mean there was any intention in the violation and certainly does not mean a crime has been committed. Most penalties imposed by the SEC are the result of unintentional violations.”

The regulatory systems in place by the SEC are very complex—according to one lawyer, “some of the most complex disclosure regimes found anywhere on the planet.” Even very sophisticated financial professionals don’t always fully understand the nuances of those regulations. A large number of fines take place simply because of a misunderstanding of various overlapping rules.  

The Church and EPA obviously hire experts and have to rely upon those experts to give advice regarding compliance with all applicable laws and regulations, including SEC regulations. 
...

Should we expect further investigations of Ensign Peak Advisors?

It’s certainly possible. The EPA fund at issue is a large fund. As such, it will continue to be held under scrutiny.

In addition, there have been efforts by detractors to have EPA investigated by both the IRS and the Senate Finance Committee. But experts suggest that these complaints lack legal merit and are not likely to be acted on. 

The current SEC matter against EPA is completely resolved, and EPA’s current reporting practice is considered by the SEC to be in complete compliance.

If these kinds of fines are so common, why has there been so much media coverage?

We can only speculate why individual newsrooms have decided to report on the story, but as media professionals, we see that this story has several elements that would be attractive to journalists that have nothing to do with the severity or unusualness of the matter.

The Church of Jesus Christ is still a curiosity for many Americans, and as a result, articles that can refer to the Church in their headlines generate more traffic. And because of the Church’s position on moral issues, it can be used as a lightning rod in culture war debates, which can motivate both journalists and their readers. Moreover, EPA is considered a large fund and manages a large sum of money.  All these reasons taken together could generate sufficient newsworthiness. 

What changes have Ensign Peak Advisors made to avoid these issues in the future?

This was a narrow issue. And the narrow issue has been fixed for more than three years now. While it is unfortunate that there was ever a misunderstanding about disclosure requirements based on the advice of counsel, it’s also probably unavoidable that in its more than 25-year history EPA would make some mistake on its disclosure requirements. Once again, its overall record on compliance is impeccable.

 

What do this investigation and penalty say about the Church’s priorities and values? 

Not much. The Church invests in its fund to fulfill its mission, which in addition to its religious mission, includes humanitarian aid that totaled nearly a billion dollars last year. 

While it’s appropriate that the Church expressed regrets for mistakes made, these kinds of fines are commonplace even among organizations doing their best to be in compliance because of the extraordinarily complicated nature of the regulations.

Wow.  Pretty good stuff, this.

Thanks,

-Smac

[smac97]

6 hours ago, ttribe said:

Quote

Quote

https://publicsquaremag.org/faith/church-state/ensign-peak-clarifying-the-sec-announcement/

That seems fairly straight forward.  @ttribe, what in that piece do you find inaccurate?  (not a gotcha, sincerely want to know where you would disagree).

I don't specifically disagree with any of it. I do find some of the explanations a little self-serving, but it is accurate. It would be foolish for the Church to issue any statement that was inaccurate at this point.

ttribe: 

Quote

In my experience as an expert witness who is a Certified Fraud Examiner, the establishment of the shell LLCs would be used to show an intent to, at best, mislead users of the filings, if not to outright defraud them. They need to get their house in order on this, right away.

This comes across as a pretty strong implication against the Church ("at best, mislead users of the filings, if not to outright defraud them").

Also ttribe: 

Quote

Intentional concealment is a serious problem. Hence, the charges by the SEC. Attempting to downplay the ramifications of these acts is not helpful.

This comes across as you attempting to make "these acts" out to be nefarious.

Also ttribe:

Quote

From the Order:
...
These are overt actions meant to conceal and obfuscate.  These acts are very difficult to wave away as the actions of someone who just made a "mistake."

Again, this comes across as accusatory.  Inculpatory.

Also ttribe:

Quote

To be clear, they were charged with not filing the forms in Ensign Peak's name. That's the lie.

"That's the lie."

That sounds pretty accusatory.  Condemnatory.

Compare this with Public Square Mag:

Quote

Did Ensign Peak Advisors ever hide its stock holdings?

There are no allegations that they did.
...

Were the “shell companies” the EPA used illegal?

There’s no allegation that they were. These companies are the subsidiary LLCs that EPA used to reorganize in 2000. Most shell companies are used for legitimate purposes, particularly in the financial sector. They can be used to legitimately maintain the privacy of investors or better organize financial assets. The SEC’s claim is not that EPA’s organizational scheme was fraudulent, but that using that organization, EPA should have reported differently than they did.

"The SEC’s claim is not that EPA’s organizational scheme was fraudulent..."

You agree with this?

Quote

Is getting fined by the SEC a big problem for an investment fund or relatively common?

Obviously, a fund never wants to be fined. But fines like this are common. About 5% of investment funds are fined by the SEC each year. Experts compare it to a traffic ticket.

"Experts compare it to a traffic ticket."

You agree with this?

Quote

Does the evidence suggest that Ensign Peak Advisors purposely violated the SEC’s disclosure requirements? Are Ensign Peak Advisors and/or the Church of Jesus Christ culpable for breaking the law?

The SEC’s announcement included nothing of the sort. And these regulations don’t really work that way. As this same lawyer said, “Yes, there are rules that dictate how money managers disclose the existence of funds. But there is no culpability requirement to trigger a penalty or a violation of these rules. Sometimes mistakes are made, and often inadvertently are, but that doesn’t mean there was any intention in the violation and certainly does not mean a crime has been committed. Most penalties imposed by the SEC are the result of unintentional violations.”

The regulatory systems in place by the SEC are very complex—according to one lawyer, “some of the most complex disclosure regimes found anywhere on the planet.” Even very sophisticated financial professionals don’t always fully understand the nuances of those regulations. A large number of fines take place simply because of a misunderstanding of various overlapping rules.  

The Church and EPA obviously hire experts and have to rely upon those experts to give advice regarding compliance with all applicable laws and regulations, including SEC regulations. 

You agree with these bolded statements?

Quote

What changes have Ensign Peak Advisors made to avoid these issues in the future?

This was a narrow issue. And the narrow issue has been fixed for more than three years now. While it is unfortunate that there was ever a misunderstanding about disclosure requirements based on the advice of counsel, it’s also probably unavoidable that in its more than 25-year history EPA would make some mistake on its disclosure requirements. Once again, its overall record on compliance is impeccable.

You agree with these bolded statements?

Frankly, your overall assessment has been . . . pretty even-handed.  You still end up accusing the Church here and there, so the overall tenor of your participation in this thread seems to be accusatory/inculpatory.  In contrast, the Q&A from Public Square Magazine is largely explanatory and exculpatory, and you state that you "don't specifically disagree with any of it," and that it is "accurate."  So I guess I'm getting something of a mixed message here.

Thanks,

-Smac

[smac97]

7 hours ago, pogi said:

Quote

https://publicsquaremag.org/faith/church-state/ensign-peak-clarifying-the-sec-announcement/

What troubles me the most about all of this is the why, which is conveniently not addressed.  

I don't understand.  I found the Public Square Mag Q&A to be replete with explanations as to the "why"s.

• "Why does a Church need an investment management firm?"
• "Why was the SEC investigating Ensign Peak Advisors?"
• "What is form 13F, and why is it important to disclose?:
• "If nothing was hidden and the organization was legal, why was the SEC concerned?"
• "If these kinds of fines are so common, why has there been so much media coverage?"

These parts in particular:

Quote

Did Ensign Peak Advisors ever hide its stock holdings?

There are no allegations that they did. Each of EPA’s subsidiaries reported their holdings. So all of the fund’s holdings were disclosed through form 13F reports for each individual affiliated entity. EPA and the Church have stated that they believe all of their holdings were reported. 

Were the “shell companies” the EPA used illegal?

There’s no allegation that they were. These companies are the subsidiary LLCs that EPA used to reorganize in 2000. Most shell companies are used for legitimate purposes, particularly in the financial sector. They can be used to legitimately maintain the privacy of investors or better organize financial assets. The SEC’s claim is not that EPA’s organizational scheme was fraudulent, but that using that organization, EPA should have reported differently than they did.

If nothing was hidden and the organization was legal, why was the SEC concerned?

Because the subsidiaries were all under the control of EPA the SEC believed they needed to file one joint form 13F.

No accusations have been made that EPA abused the separate filings to gain advantage, but the separate filings could in theory have made it possible to do so.
...
 

Does the evidence suggest that Ensign Peak Advisors purposely violated the SEC’s disclosure requirements? Are Ensign Peak Advisors and/or the Church of Jesus Christ culpable for breaking the law?

The SEC’s announcement included nothing of the sort. And these regulations don’t really work that way. As this same lawyer said, “Yes, there are rules that dictate how money managers disclose the existence of funds. But there is no culpability requirement to trigger a penalty or a violation of these rules. Sometimes mistakes are made, and often inadvertently are, but that doesn’t mean there was any intention in the violation and certainly does not mean a crime has been committed. Most penalties imposed by the SEC are the result of unintentional violations.”

The regulatory systems in place by the SEC are very complex—according to one lawyer, “some of the most complex disclosure regimes found anywhere on the planet.” Even very sophisticated financial professionals don’t always fully understand the nuances of those regulations. A large number of fines take place simply because of a misunderstanding of various overlapping rules.  

The Church and EPA obviously hire experts and have to rely upon those experts to give advice regarding compliance with all applicable laws and regulations, including SEC regulations. 

No Q&A is perfect, but this one sure seems pretty good.

7 hours ago, pogi said:

I also find the bit about it being an unintentional mistake to be misleading.  They received a clear warning by the CAD that this may be illegal.

Maybe.

And if it happened, it was after-the-fact.

And if it happened, "may be illegal" is cautionary, not definitive.

Moreover, the PSM article notes that "{t}he regulatory systems in place by the SEC are very complex—according to one lawyer, 'some of the most complex disclosure regimes found anywhere on the planet.'"  It seems like this complexity ought to be taken into account.

The PSM article also states that "{t}he SEC’s claim is not that EPA’s organizational scheme was fraudulent, but that using that organization, EPA should have reported differently than they did."  If true, this ought to be taken into account as well.

And this: "There have been no allegations by the SEC of insider trading, accounting fraud, market manipulation, or other practices relating to the Church’s investment management firm."

And this: "Obviously, a fund never wants to be fined. But fines like this are common. About 5% of investment funds are fined by the SEC each year. Experts compare it to a traffic ticket."

7 hours ago, pogi said:

I also don’t like how they are concealing what the leaders actually knew by hiding them behind legal advisors.  

I think you may be using "concealing" and "hiding" in some idiosyncratic ways.

Thanks,

-Smac

Edited February 22, 2023 by smac97

[smac97]

7 hours ago, ttribe said:

Whoa! Where did this 'repeatedly accused the church of lying.." thing come from?

"In my experience as an expert witness who is a Certified Fraud Examiner, the establishment of the shell LLCs would be used to show an intent to, at best, mislead users of the filings, if not to outright defraud them."

"Intentional concealment is a serious problem."

"To be clear, they were charged with not filing the forms in Ensign Peak's name. That's the lie."

7 hours ago, ttribe said:

What I've done is repeatedly quoted from and directed you to read the Order. I understand that is the Church's argument, but the SEC says it resulted in a violation of the law.

"The SEC says" being the operative phrase.

And per the PSM article, which you do not disagree with and find to be "accurate," the "violation of the law" in view is functionally equivalent to "a traffic ticket."

Thanks,

-Smac

[smac97]

5 hours ago, Analytics said:

Quote

If true, it's interesting to me that the SEC didn't actually charge them with lying or misleading or fraud.  They haven't been shy about charging other companies with that kind of stuff when they've been able to prove that was the intent.  So why not charge the EP similarly?

The SEC did charge them similarly. That is why they got a $5,000,000 fine.

Well, no.  See the Public Square Mag article.  And Section II and the first sentence of Section III of the SEC Order.

Thanks,

-Smac

[smac97]

6 hours ago, Analytics said:

Quote

It would seem that the SEC, which provides oversight for the PCAOB, uses the following definition for "misstatement" : Appendix A: Definitions | PCAOB (pcaobus.org) , hardly "its term for lying."

"Misstatement – A misstatement, if material individually or in combination with other misstatements, causes the financial statements not to be presented fairly in conformity with the applicable financial reporting framework.1/ A misstatement may relate to a difference between the amount, classification, presentation, or disclosure of a reported financial statement item and the amount, classification, presentation, or disclosure that should be reported in conformity with the applicable financial reporting framework. Misstatements can arise from error (i.e., unintentional misstatement) or fraud."

In this case, the misstatements the Church has been found guilty of did not arise from error (i.e. unintentional misstatement). They arose from fraud.

Again, no.  The Church has not "been found guilty" of anything, let alone "fraud."

I get that you are giddy at the prospect of this story becoming an indictment of the moral stature of the Church, but your claims pertaining to this story are, in many respects, off by a country mile.

Thanks,

-Smac

Edited February 22, 2023 by smac97

[smac97]

5 hours ago, Analytics said:

Quote

Quote

In this case, the misstatements the Church has been found guilty of did not arise from error (i.e. unintentional misstatement). They arose from fraud.

I'll leave it to the SEC to make that clear, thanks.

Please do. Here is the link:

https://www.sec.gov/litigation/admin/2023/34-96951.pdf

Okay.  I did a search for the word "fraud."  Zero hits.  So where are you getting this "They arose from fraud" stuff?

Thanks,

-Smac

[Calm]

Apologies if this has been posted, the search function isn’t showing it…nothing new as far as I see

https://www.thechurchnews.com/global/2023/2/21/23608668/church-ensign-peak-settle-matter-with-sec-have-remained-in-compliance-since-2019

Edited February 22, 2023 by Calm

[smac97]

2 hours ago, Analytics said:

Yes, I think that "Public Square" article is deceptive in its own right.

In what ways?

Thanks,

-Smac

[smac97]

1 hour ago, Analytics said:

Quote

As I understand it, the SEC Order contains allegations.  Claims of fact not yet proven to be true.

I would emphasize that the SEC spent years investigating this,

And yet it's Order still contains unproven and unsubstantiated allegations.

Law enforcement and prosecutors can spent years investigating something, but the duration of an investigation doesn't equate with a factual finding by an adjudicative body.

And contrary to your calumnies, the Church has not admitted to, and the SEC has neither charged nor even referenced, "fraud."

1 hour ago, Analytics said:

and I’d add to that the fact that the church claims it cooperated fully.

And yet the order is expressly predicated on an offer of settlement from the Church, with no admission or denial of the findings.

So the findings remain . . . allegations.  That is, "claim{s} of fact not yet proven to be true."

On March 6 I will be participating in a mediation involving the Utah Labor Commission.  The allegation is that my client fired an employee based on her gender and religious affiliation (or lack thereof).  My client is adamant that this is utterly untrue.  The claimant secretly contacted one of my client's other employees, told him that he will be a "key" witness, and also asked him repeatedly to "confirm" a number of claims she has presented to the Labor Commission.  Instead, he has signed an affidavit in which he expressly rejects the claimant's allegations.  The claimant has also apparently withheld the identities of the other witnesses she intends to call.  I suspect this is because she wants to get to the mediation and claim to have - without identifying - witnesses who will back her up.  Also, her claims arise almost exclusively from the decision-making processes of a small executive hiring committee, and all of the members of that committee are prepared to testify that they fired the claimant on "for cause" grounds.

Nevertheless, we will likely pay some small amount to settle the matter.  That is often how these things play out.  Allegations are made, but not proven or demonstrated through the presentation of competent, probative, admissible, sufficient evidence.  Instead, the parties leave the facts unresolved and settle the matter.

I think the SEC Order reflects that.  Its findings are sufficient for the SEC, but are not binding on anyone else.  And per the PSM article, "{a}bout 5% of investment funds are fined by the SEC each year."  Holy cow.  That's one in twenty investment funds being fined.  Every year.  EPA has been around for 25 years and, per the PSM article, this is the first time the SEC has audited it, which "suggests a strong history of compliance."

Thanks,

-Smac

[Calm]

5 hours ago, smac97 said:

If I am reading this correctly, the Commission is presenting its findings by way of "settlement" as opposed to having reached conclusions based on adjudicatory sifting of evidence.  Put another way, this may be the equivalent of a defendant settling with a plaintiff, with neither party having established actual wrongdoing or liability.

From https://www.sec.gov/enforcement/how-investigations-work

Quote

The Enforcement Division assists the Commission in executing its law enforcement function by recommending the commencement of investigations of securities law violations, by recommending that the Commission bring civil actions in federal court or before an administrative law judge, and by prosecuting these cases on behalf of the Commission. As an adjunct to the SEC's civil enforcement authority, the Division works closely with law enforcement agencies in the U.S. and around the world to bring criminal cases when appropriate.

The Division obtains evidence of possible violations of the securities laws from many sources, including market surveillance activities, investor tips and complaints, other Divisions and Offices of the SEC, the self-regulatory organizations and other securities industry sources, and media reports.

All SEC investigations are conducted privately. Facts are developed to the fullest extent possible through informal inquiry, interviewing witnesses, examining brokerage records, reviewing trading data, and other methods. With a formal order of investigation, the Division's staff may compel witnesses by subpoena to testify and produce books, records, and other relevant documents. Following an investigation, SEC staff present their findings to the Commission for its review. The Commission can authorize the staff to file a case in federal court or bring an administrative action. In many cases, the Commission and the party charged decide to settle a matter without trial.

It appears like a non criminal investigation comparable to a police investigation, which sometimes gets things wrong or misses important evidence.  Court documents use the SEC “alleges as follows” language.

I wonder if anyone has studied the rate accuracy of such charges. Found trial wins for the last report, but of course this doesn’t address all those that settle.  20% of those who went to trial were found not guilty.

Quote

 The Division’s Trial Unit, including staff from all of the SEC’s Offices, achieved tremendous results on behalf of investors, winning favorable verdicts in 12 of the 15 trials – the most conducted by the Division in a single year within the past decade. These cases spanned an array of issues, including investment advisory fraud, securities fraud and registration violations, and fraud in connection with the operation of a private investment fund. The staff also obtained complete wins on liability at the summary judgment stage in another nine matters, as well as partial summary judgment in many others, on behalf of the SEC.

Looks like the SEC can require admissions of guilt if they want…but didn’t here even though according to the website they are getting tougher to crack down on corruption, etc. 

Quote

To deter future misconduct and enhance public accountability, the SEC in a number of actions recalibrated penalties for certain violations, included prophylactic remedies, and required admissions where appropriate. For example, the $1.235 billion in cumulative penalties paid in connection with the recordkeeping violations made clear that the fines were not just a cost of doing business. The undertakings in those cases included retention of compliance consultants to, among other things, conduct comprehensive reviews of the firms’ policies and procedures relating to the retention of electronic communications found on personal devices. In addition, the firms admitted their conduct and acknowledged that their conduct violated recordkeeping provisions of the federal securities laws.

https://www.sec.gov/news/press-release/2022-206

Since the Church chose not to defend itself in court and settled without admitting wrongdoing, the claims have not been tested.  Does the innocent until proven guilty apply in this kind of case or not?

Edited February 22, 2023 by Calm

[ttribe]

@smac97

"Charges"

https://www.sec.gov/news/press-release/2023-35

[mrmarklin]

19 hours ago, bluebell said:

I’m glad to know that they fixed it when they became aware of the problem.  What more can we ask of any organization?

These are technical issues.  Likely the Church could have negotiated for years regarding this supposed violation.  Or even gone to the court system.  But the government has a heavy hand. Sometimes it’s cheaper and certainly quicker just to pay a bribe er fine. 

[Teancum]

7 hours ago, smac97 said:

This is an unserious and ignorant, and demonstrably incorrect, assertion.

You tell me oh wise one, why did EPA splist assets among 13 LLCs?  Just for fun?

7 hours ago, smac97 said:

Are you still skinning puppies for fun and profit?

 

Thanks,

-Smac