Church fined by SEC

[pogi]

25 minutes ago, Kenngo1969 said:

Whatever opinion you wish to hold, a priori,

I reject your judgment.  I have examined all evidence presented to me and considered testimony from the President of the EPA.  I have carefully examined the church and EPAs response.  The allegations were not made blindly , I don't plan to treat them as if they are blind.  The church could have contested in a court of law, but they chose not to.  I am left to judge with the best evidence I have.

25 minutes ago, Kenngo1969 said:

regarding alleged wrongdoing by the Church of Jesus Christ of Latter-day Saints, no one can stop you.  However, evidence matters, truth matters, and proof matters. 

If proof matters, then the church should have proven their case in court.  Apparently they don't care enough about proof to make the effort - why should I?  I can't prove anything, but neither am I going to toss these serious allegations under the rug as if they don't matter.  They do matter and deserve consideration. 

25 minutes ago, Kenngo1969 said:

And in this case, no evidence (much less any proof) has been offered in a court of law that indicates or demonstrates that the Church of Jesus Christ of Latter-day Saints has engaged in any wrongdoing.

Many judgments can and should be made outside of a court of law.  The church didn't give me that option of a courts opinion, so I am left to judge based on what I have been presented. 

25 minutes ago, Kenngo1969 said:

Contrary to the foregoing statement, however, you do not speak for all members of the Church of Jesus Christ of Latter-day Saints.

Of course not. 

[CV75]

1 hour ago, jkwilliams said:

This is a fascinating thread. According to the SEC, a large corporation “went to great lengths to avoid disclosing [its] investments,” setting up 13 shell corporations and having figurehead managers sign the required legal forms. A couple of internet investigators (full disclosure: one is my cousin) discovered the shell corps and made the corporation’s actions public. Only at that point did the corporation revise its practices. Not surprisingly, the SEC fined the corporation for violating the law. 

At this point, there’s not much in dispute. But for some reason, people feel the need not only to justify the corporation’s actions, but they suggest that anyone who thinks the corporation actually did something wrong are motivated by bitterness and bias against said corporation. It’s even suggested that the SEC may have engaged in an abuse of power.

The bottom line for me is that, for whatever reason, some people cannot acknowledge the possibility that an organization whose daily operations are performed by humans, could ever do anything wrong. Such people believe in the theoretical fallibility of said organization, but will never acknowledge a specific instance of hypothetical wrongdoing.

Am I the only one who sees it this way? My father taught his children to expect human failings in humans, especially church leaders. As my sister so aptly put it, we expect mistakes, so we are never shocked or disappointed when they happen. At what point is it OK to acknowledge that people we revere sometimes screw up?

That’s the rub: one's bias as to whether the interpretation of the order and the resolution lean toward mistakes or wrongdoing ("screw up" can apply to both). The Restored Gospel allows that making and keeping covenants makes this distinction clearer to discern, and perhaps more importantly, makes the follow-up decisions and actions more meaningful and rewarding: Overcome the World and Find Rest (churchofjesuschrist.org)

[MrShorty]

2 hours ago, pogi said:

That's how webs begin, with one lie. 

Among those whose memories stretch back to the '80s, how many are now singing and humming to themselves, "You tell one lie, It leads to another. So you tell two lies To cover each other. So you tell three lies. Oh brother! You're in up to your ears! So you lie and lie Without even trying, And each lie you tell Just keeps multiplying...[and my memory ends there]"

Brought to you by the Church of Jesus Christ of Latter-day Saints. The Mormons!

We now return you to your regularly scheduled programming.

[OGHoosier]

Unsolicited opinion time:

I give it as my opinion that EPA acted unethically in how it handled the Business Manager's signatures. 

I think that the general scheme of the shell LLCs was not unethical. I think the EPA's decision to file separate 13(f)s was done under an interpretation of statute which was viable, though ultimately not upheld. Such is the way with regulation and litigation. 

Roger Clarke was not saying that the Church wanted to give the impression of being dependent on tithing in order to "keep members paying" as some have put it. He was saying that the Church wanted to protect the Saints from being assailed by facile arguments that they are wrong to give tithes to a visibly wealthy organization. I think Clarke's words have been misinterpreted to ill effect.

That's about it. I doubt that Church leadership was made privy to how Ensign Peak handled the Business Manager signatures, so I don't know about culpability there. In my opinion, we don't know a great deal of relevant facts. I'm also troubled by the reflexive trust given to the SEC here. @smac97's points about the dangers of presumptively trusting administrative bodies are well-made, if not well-received.

That's about it. Flense me as you like. 

Edited February 23, 2023 by OGHoosier

[MrShorty]

35 minutes ago, carbon dioxide said:

If paying 10% to an outside organization is a tith payer, I suppose Bill Gates is a tith payer as well.

Could be another very interesting side discussion -- what is tithing? (with the desire to go beyond a few prooftexts and dictionary definitions)

[smac97]

40 minutes ago, Analytics said:

Quote

As I have said a few times now, I just don't see much of a moral dimension to this story.  

The Church sought legal advice as to how to comply with technical reporting requirements which are based on statute and interpreted (perhaps not altogether correctly) by the SEC.  The Church enacted efforts that it felt - based on legal advice - was compliant with the law.

Let me get this straight.

Right.  

40 minutes ago, Analytics said:

You think the Church's attorneys said that it would be legal and ethical to select "Business Managers" who didn't do anything whatsoever to run the business,

I don't know if that is what happened.  Assuming it did, however, the statutory language appears to allow for this (even if the SEC might not).  So . . . yes, it's possible this was "legal and ethical."

40 minutes ago, Analytics said:

hand those "Business Managers" signature pages of SEC documents that the Business Manager's didn't understand,

I don't know if this happened.

40 minutes ago, Analytics said:

and then attach those signed signature pages to filings that were full of deliberate lies misstatements?

I don't know if this happened.

And you are poisoning the well here.  You are presuming that which has yet to be demonstrated.

Meanwhile, the statute allows "some other person" (other than the manager of the LLC) to "have responsibility for such investment decisions."

40 minutes ago, Analytics said:

You think that is proper, ethical advice that the Church got from its attorneys and followed in good faith, thinking it honest?

I think I have been pretty clear that the Church may well have received bad (or incomplete) legal advice.  

Or the advice was solid, and the SEC is getting it wrong.  Both are possibilities.

40 minutes ago, Analytics said:

If there is no moral dimension to this story, why do you think two of the business managers resigned when this started to come to light? 

I am disinclined to speculate, but their purported resignations are not per se evidence of noncompliance with the law.

Thanks,

-Smac

Edited February 23, 2023 by smac97

[Analytics]

30 minutes ago, ttribe said:

Don't forget the part about 'managers' being selected because they had common names to avoid fruitful social media searches. That also shows how ethical and moral these actions were.

Exactly. And this is part of the reason that doing their scheme legally would have been pointless. If they would have delegated trading authority to the LLC's, they would have needed to choose managers based on qualifications rather than on the basis of having anonymous names. If they would have done that, it would have been much harder to maintain the secrecy they were aiming for in the first place.

[Calm]

30 minutes ago, SeekingUnderstanding said:

Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal, but if ye do, hide your wealth with a maze of shell corporations, to make sure no one finds out about it. 

I think the defense would be they are not laying them up for themselves.

[smac97]

9 minutes ago, jkwilliams said:

Quote

For the umpteenth time, in a legal setting, nothing is a "fact" unless it's admitted by the party charged or adjudicated as fact by an impartial factfinder.

So yes, "assumptions" abound in this discussion.

What about when the SEC quotes an organization’s statement of its motive? 

I suppose that would likely fall into the "it's admitted by the party charged" category.

Thanks,

-Smac

[carbon dioxide]

4 hours ago, Tacenda said:

I don't mind this, except that they need to let up on the tithing talks. Why is it so important, in the Bible tithing isn't all that important in the scheme of things. That's my only problem with the church and it's soon to be trillions. 

Tithing is an obedience issue between God the the tith payer.  How much the church has is not really relevant.  When the Lord judges each person he is going to simply ask if they paid a full tith.   The answer is yes or no.   There is no indication anywhere that the Lord is going to say "Since the church had a lot of money, you are released from living this law or principle".  Tithing is a faith issue.  For some people, paying tithing when their finances are not well is their test of faith.  Perhaps for some paying tithing when the Church has lots of money is their test of faith.  I don't think is wise to play a guessing game with the Lord in how He is going to judge things.  I don't think an excuse that they did not feel the need to pay tithing because the Church did not need is a winning argument or answer to the Lord.  In the end, we all will be judged for our actions.  We have to ask ourselves how confident are we in the excuses and answers we give to him.  In a debate between the Lord and us, we always lose that debate. 

[pogi]

14 minutes ago, smac97 said:

No.  Because they are "allegations" means that we should not accept them outright.  Due Process.  Presumption of innocence.  Actual evidence presented to an impartial factfinder (rather than unadorned assertions, as we have in the SEC Order).  These things are important.

No.  That is not how this works.  Due process?  You say that like I am robbing them of it     Opting out of their right to due process doesn't give them a clear pass of presumption of innocence in the court of public opinion.  Sorry.  This is not a court of law.    We HAVE to make judgments (non-legal of course).  I refuse to be a doormat and blindly trust.  I am required to judge this matter based on the best evidence presented to me.      

[SeekingUnderstanding]

22 minutes ago, smac97 said:

For the umpteenth time, in a legal setting, nothing is a "fact" unless it's admitted by the party charged or adjudicated as fact by an impartial factfinder.

Are we in a legal setting here????

[Teancum]

1 hour ago, jkwilliams said:

Again, the church’s reasons are stated:

To address this issue, on March 21, 2005, the senior leadership of the Church approved a new reporting entity to be created with “better care being taken to ensure that neither the ‘Street’ nor the media [could] connect the new entity to Ensign Peak.”

No sinister imputations necessary. 

But one does not need to be an attorney to figure this out.  And we are just implying sinister motives to the church.

Edited February 24, 2023 by Teancum

[Calm]

44 minutes ago, jkwilliams said:

To address this issue, on March 21, 2005, the senior leadership of the Church approved a new reporting entity to be created with “better care being taken to ensure that neither the ‘Street’ nor the media [could] connect the new entity to Ensign Peak.”

And what is inherently sinister about that?

Could not it be for an excellent morally upright reason as in not wanting to have undue influence on the market including a possible “price depressing effect” which could harm others as referred to in Elder Eyring’s recollections mentioned earlier?

Quote

They began to discuss a strategy for selling stocks to capture the gains of the past eighteen months and limit the Church’s downside investment risk. But the team recognized a problem: the Church’s holdings were so substantial that selling large blocks of stock quickly could “move the market,” overwhelming the normal demand from buyers. They agreed to begin selling steadily in small amounts that wouldn’t have a price-depressing effect. 

https://www.mormondialogue.org/topic/75133-church-fined-by-sec/?do=findComment&comment=1210137908

Or the highly moral in my view desire to avoid the indirect effect of members and others using the church as their financial adviser/guru, which is rather unwise unless they too have a massive corporation with similar resources and needs?  I see this as somewhat paternal, but also accepting of the social responsibility that comes from being a beacon on the hill…even if you don’t want to be.  It’s like knowing the disclaimers attached to videos of professional stuntmen of “don’t try this at home” are going to be ignored by a certain percentage of the population as will any other warning, so the decision is to remove the videos from public viewing.  I see the heart as in the right place, but maybe overkill in this case.  

Or the equally moral even if so overly paternal in my view desire to remove on our behalf a temptation to break the covenant we make as members to tithe to God with the Church as his agent?

Or the pragmatic desire to avoid putting a target on the Church similar to how doctors are typically advised to carry the average amount of malpractice insurance and no more as carrying a large malpractice policy increases the likelihood of being sued and plaintiffs seeking larger amounts?

 

Edited February 24, 2023 by Calm

[Teancum]

26 minutes ago, smac97 said:

For the umpteenth time, in a legal setting, nothing is a "fact" unless it's admitted by the party charged or adjudicated as fact by an impartial factfinder.

So yes, "assumptions" abound in this discussion.

Thanks,

-Smac

So the SEC just made an assumption about the employees and how they were directed to sign off on the 13Fs?  

[Analytics]

18 minutes ago, smac97 said:

Oh, goody.  A "let me get this straight" from Analytics is almost always code for "let me radically distort and mischaracterize what you are saying, so as to obscure and distract from what you actually said."

You said, "there does not seem to be grounds to indict the Church in any particular moral sense...." I'm simply trying to understand how in the heck you came to this conclusion.

18 minutes ago, smac97 said:

I don't know if that is what happened...

I don't know if this happened.

I don't know if this happened.

And you are poisoning the well here.  You are presuming that which has yet to be demonstrated.

I'm merely citing the uncontested facts we have to work with. 

If those things didn't happen, why in the hell did the Church agree to a settlement that resulted in not only a $5,000,000 sanction, but also in them not being allowed to correct these balled-faced lies the SEC made up that tarnish their good name? Why wouldn't they fight to protect their good name and the truth, rather than let these lies go uncontested?

The Church's actions don't make any sense unless the uncontested facts in the Order are in fact true. We can in fact be confident that the things in the SEC report really did happen. 

Pretending that we don't know and that none of this has been demonstrated is doing just what I accused you of: ignoring the ethical issues.

18 minutes ago, smac97 said:

I think I have been pretty clear that the Church may well have received bad (or incomplete) legal advice.  

In my profession, Precept 1 of the Code of Professional Conduct says:

"An Actuary shall act honestly, with integrity and competence, and in a manner to fulfill the profession’s responsibility to the public and to uphold the reputation of the actuarial profession."

If I received "bad (or incomplete) legal advice" that told me I could get away with acting dishonestly and without integrity, I would hold myself to a higher standard anyway. Blaming it on the lawyers is a copout. 

18 minutes ago, smac97 said:

I am disinclined to speculate, but their purported resignations are not per se evidence of noncompliance with the law.

Given all of the other uncontested facts from the SEC investigation, it's clear that these two Church employees resigned because they didn't want to sign false reports anymore. 

Edited February 24, 2023 by Analytics

[jkwilliams]

1 minute ago, Calm said:

And what is inherently sinister about that?

Could not it be for an excellent morally upright reason as in not wanting to have undue influence on the market as referred to in Elder Eyring’s recollections mentioned earlier?

Or the highly moral in my view desire to avoid the indirect effect of members and others using the church as their financial adviser/guru, which is rather unwise unless they too have a massive corporation with similar resources and needs?

Or the equally moral even if overly paternal in my view desire to remove on our behalf a temptation to break the covenant we make as members to tithe to God with the Church as his agent.

Or the pragmatic desire to avoid putting a target on the Church similar to how doctors are typically advised to carry the average amount of malpractice insurance and no more as carrying a large malpractice policy increases the likelihood of being sued and plaintiffs seeking larger amounts.

 

I didn’t say there was anything sinister about it. Teancum restated what the SEC said, quoting the church, and he was accused of imputing sinister motives. He wasn’t, and I’m not. 

[webbles]

5 minutes ago, Analytics said:

Exactly. And this is part of the reason that doing their scheme legally would have been pointless. If they would have delegated trading authority to the LLC's, they would have needed to choose managers based on qualifications rather than on the basis of having anonymous names. If they would have done that, it would have been much harder to maintain the secrecy they were aiming for in the first place.

We have 20/20 hindsight to say that the SEC didn't agree with the scheme.  But, back in 1998, 2005, etc, the church leadership and EPA leadership had a goal.  That goal was to make it harder for people to determine how much investments the church really had.  They had legal consultation and came up with a solution.  They would create mini LLCs which would have control of the stocks and those mini LLCs would file the 13Fs.

Since the purpose of those mini LLCs was to hide their connection to the church and EPA, using names that were common makes a lot of sense.  I don't see how that shows that EPA was intentionally trying to break the law.  Were they misleading?  Yes.  But I doubt they considered themselves to be breaking the law.  After reading more about the 13Fs, a lot of investment managers skirt that law.  You are supposed to file the form within 45 days of the end of the quarter.  Most large managers will file it at the very last minute (and some even go after the last minute every now and then).  There was even a study that looked at 13Fs and found that they were "fraught with errors" and a "non-standardized mishmash of jumbled (and often inaccurate) information" https://corpgov.law.harvard.edu/2016/08/08/form-13f-mis-filings/

Hiding the church's wealth isn't necessarily a "sinister motive" or a bad thing.  We don't know the actual motive and it could easily have been multiple motives that changed over time.  When it was first done, President Hinckley was president of the church and President Burton was presiding bishop.  When they added more LLCs, President Monson was president of the church and President Stevenson was presiding bishop.  The motives at those two times could be vastly different.  Also, a year before the first LLC was done, Times had just published "Mormons, Inc".  I could see church leadership not liking that type of publicity.

[Calm]

6 minutes ago, jkwilliams said:

I didn’t say there was anything sinister about it. Teancum restated what the SEC said, quoting the church, and he was accused of imputing sinister motives. He wasn’t, and I’m not. 

You were responding to this:

Quote

You are imputing sinister motives to the Church of Jesus Christ of Latter-day Saints… 

I don’t get why you would respond to the above by giving an example of church behaviour and yet expect us not to see that as your evidence of sinister behaviour, but even if I don’t understand I will take your word you meant your answer differently.

[smac97]

4 minutes ago, OGHoosier said:

Unsolicited opinion time:

I give it as my opinion that EPA acted unethically in how it handled the Business Manager's signatures. 

This may be so.  As I have mentioned previously, I found the allegations on this point troubling.

4 minutes ago, OGHoosier said:

I think that the general scheme of the shell LLCs was not unethical.

Agreed.  That is is being characterized, in and of itself, as indicative of nefarious intent or misconduct is pretty weird. 

4 minutes ago, OGHoosier said:

I think the EPA's decision to file separate 13(f)s was done under an interpretation of statute which was viable, though ultimately not upheld. Such is the way with regulation and litigation. 

I previously spent several years representing large banks and financial institutions (Bank of America, US Bank, Deutsche Bank, etc.).  There were quite a few cases in which our legal strategy rested heavily on whether or not it might become a "test case," described here:

Quote

In case law, a test case is a legal action whose purpose is to set a precedent. Test cases are brought to court as a means to provide a clearer definition to laws with disputed meaning and/or intent. An example of a test case might be a legal entity who files a lawsuit to see if the court considers a certain law or a certain legal precedent applicable in specific circumstances. This is useful, for example, to validate later filing similar lawsuits.

By and large, lenders did not want to be the legal guinea pig.  They did not want to bear the burden and expense and risks associated with testing a novel or untested question of law.

For example, let's say that US Bank gets sued by a borrower of a residential loan.  The loan had been discharged in bankruptcy (meaning the legal right to collect payment from the borrower was eliminated), but the loan (the trust deed or mortgage) remained on land records as collateralizing the home, so the lender could still foreclose on it.  The borrower then spends a number of years filing further bankruptcy petitions (each of which causes months and months of delays in the foreclosure process), submitting serialized requests for loan modifications (each process being drawn out as long as possible).  Eventually, enough time has ticked by - six years since the last payment - that the borrower files a lawsuit claiming that the statute of limitations bars enforcement of the trust deed.  During the early stages of this lawsuit, the borrower's attorney calls the bank's attorney and offers a settlement that would include a loan modification with favorable terms for the borrower.

What should the bank do?  Well, when stuff like this happened, the banks pretty much always filed a motion to dismiss which, if granted, would eliminate the lawsuit in its earliest stages.  If the motion to dismiss was denied, however, the bank would often (most of the time, really) settle.  The bank did not want to litigate, even though the borrower had  behaved poorly, because litigation is expensive, and also because the statute of limitations in a foreclosure context is a surprisingly unsettled area of law.  And because it is an unsettled area of law, no bank wanted to touch it with a ten-foot pole.  Nobody wanted to be the "test case."

I think something similar happens with SEC investigations.  I read last night that 98% of such investigations are dropped or settled.  I imagine more than a few of those which are settled involve parties who honestly think they have complied with the law, but who don't want to bear the burden and expense and risks associated with litigating against the SEC.  This is particularly so when the party can settle the matter by paying a fine, and even more particularly so when the settlement does not require any admission of wrongdoing (the SEC apparently has discretion to require or not require such an admission in the settlements it reaches).

4 minutes ago, OGHoosier said:

Roger Clarke was not saying that the Church wanted to give the impression of being dependent on tithing in order to "keep members paying" as some have put it. He was saying that the Church wanted to protect the Saints from being assailed by facile arguments that they are wrong to give tithes to a visibly wealthy organization. I think Clarke's words have been misinterpreted to ill effect.

Here is what Bro. Clarke actually said:

Quote

Mr. Clarke said he believed church leaders were concerned that public knowledge of the fund’s wealth might discourage tithing.

“Paying tithing is more of a sense of commitment than it is the church needing the money,” Mr. Clarke said. “So they never wanted to be in a position where people felt like, you know, they shouldn’t make a contribution.”

Yeah, that's not quite what I think is being characterized in this thread.

4 minutes ago, OGHoosier said:

That's about it. I doubt that Church leadership was made privy to how Ensign Peak handled the Business Manager signatures, so I don't know about culpability there. In my opinion, we don't know a great deal of relevant facts. I'm also troubled by the reflexive trust given to the SEC here.

I am also troubled, but not particularly surprised.  For those who are invested in perpetuating the worst possible spin on stories and narratives about the Church, "any port in a storm" will do, as long as it can be used to make the Church look bad.

If and when these folks are ever in the crosshairs of this or that agency from the Administrative State, I suspect they would abandon their "reflexive trust" PDQ.

4 minutes ago, OGHoosier said:

@smac97's points about the dangers of presumptively trusting administrative bodies are well-made, if not well-received.

That's about it. Flense me as you like. 

Ew.  I haven't seen that word ("flense") since I was a kid reading Judy Blume's "Blubber" (and you know, I think I hated that book).

Thanks,

-Smac

[jkwilliams]

Just now, Calm said:

You were responding to this:

I don’t get why you would respond to the above by giving an example of church behaviour and yet expect us not to see that as your evidence of sinister behaviour, but even if I don’t understand I will take your word you meant your answer differently.

No, I was responding by quoting what Teancum was summarizing. The SEC statement wasn’t imputing sinister motives, which was my point. 

[smac97]

58 minutes ago, SeekingUnderstanding said:

Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal, but if ye do, hide your wealth with a maze of shell corporations, to make sure no one finds out about it. 

Right.  'Cuz the Brethren are all living large.

You keep telling 'em, son...

Thanks,

-Smac

[Calm]

Just now, jkwilliams said:

No, I was responding by quoting what Teancum was summarizing. The SEC statement wasn’t imputing sinister motives, which was my point. 

Sorry, it still doesn’t make sense to me why you presented it that way, but doesn’t really matter.  I accept you weren’t imputing sinister motives.

To be honest, I am not seeing how Teancum is avoiding not labeling it as sinister either from the below.  Maybe it’s brain fog.

Quote

It does not take much imputation of sinister motives to understand  that manipulating employees into signing documents that just aren't true is dishonest.

 

[jkwilliams]

Just now, Calm said:

Sorry, it still doesn’t make sense to me why you presented it that way, but doesn’t really matter.  I accept you weren’t imputing sinister motives.

To be honest, I am not seeing how Teancum is avoiding not labeling it as sinister either from the below.  Maybe it’s brain fog.

 

I think it was dishonest, which is what he said, but is all dishonesty a sign of sinister motives? I don’t think so. 

[Calm]

59 minutes ago, jkwilliams said:

Again, the church’s reasons are stated:

To address this issue, on March 21, 2005, the senior leadership of the Church approved a new reporting entity to be created with “better care being taken to ensure that neither the ‘Street’ nor the media [could] connect the new entity to Ensign Peak.”

No sinister imputations necessary. 

Quote

I think it was dishonest, which is what he said, but is all dishonesty a sign of sinister motives? I don’t think so. 

 

So are you (and I would like to hear from Teancum as well in hopes of helping me understand your positions better, I may be getting confused by the multiple strands of conversation in this thread) okay with the Church wanting neither the market nor the media connecting the LLC to EPA, but just have a problem with the way they went about it because they were dishonest or do you see the very desire is dishonest?

Edited February 24, 2023 by Calm