Church fined by SEC

[jkwilliams]

6 minutes ago, Kenngo1969 said:

The SEC said it, I believe it, and that settles it!  

I'm trying to think of an explanation that makes more sense than the SEC's conclusion. 

[T-Shirt]

22 hours ago, jkwilliams said:

My reading of the SEC complaint is that said credentialed auditors told church leaders they were violating SEC regulations and were ignored. 

I'm not sure how you get this. Here is the quote from the SEC:

Quote

The Church and Ensign Peak continued to take the same approach to filing Forms 13F through the Clone LLCs despite two Church Audit Department (“CAD”) internal audits of Ensign Peak – one in 2014 and one in 2017—that reviewed the LLC Structure. In discussions with Ensign Peak’s senior management, although CAD did not recommend specific changes to the LLC Structure, CAD highlighted the risk that the SEC might disagree with the approach.

There are a few things to consider here. First there is no mention of the auditors being ignored. Not changing their method of reporting based on the auditor's, rather mild, concern, does not mean they were ignored. Second, you will notice that the auditor had this conversation with senior management of Ensign Peak. There is no mention of any Church leaders involved in this discussion as you indicated. Third, the auditor did not tell them they were "violating SEC regulations" as you claim and they did not speak to Church leaders. They simply said the SEC might disagree with the approach. Fourth, the auditors offered no recommendations for any changes.

I've seen some pretty strong assumptions made about this particular paragraph and pretty much none of them have been accurate.

Edited February 28, 2023 by T-Shirt

[T-Shirt]

38 minutes ago, jkwilliams said:

I'm trying to think of an explanation that makes more sense than the SEC's conclusion. 

The SEC made no mention of this at all. No one from Church leadership has made this claim either. This all comes from an interview by the Wall Street Journal of Roger Clarke, head of Ensign Peak Advisors, in 2020. Was this Clarke's opinion or did he hear it from Church leaders. We don't know. There is a lot of bad information floating around in this thread.

[T-Shirt]

1 hour ago, Harry T. Clark said:

I think it's time to just deal with the facts.  There were great lengths taken to keep the finances in the shadows to prevent a drop in tithing.  Unfortunately, we were misled.

See my above comment.

[pogi]

12 minutes ago, T-Shirt said:

I'm not sure how you get this. Here is the quote from the SEC:

There are a few things to consider here. First there is no mention of the auditors being ignored. Not changing their method of reporting based on the auditor's, rather mild, concern, does not mean they were ignored. Second, you will notice that the auditor had this conversation with senior management of Ensign Peak. There is no mention of any Church leaders involved in this discussion as you indicated. Third, the auditor did not tell them they were "violating SEC regulations" as you claim and they did not speak to Church leaders. They simply said the SEC might disagree with the approach. Fourth, the auditors offered no recommendations for any changes.

I've seen some pretty strong assumptions made about this particular paragraph and pretty much none of them have been accurate.

I think you too are making some assumptions about it.  You state it was a "rather mild concern".  You don't know that.  It could have stated that they were very concerned that the SEC might view things differently.  While they did not recommend any "specific" changes, they may have recommended looking into it further and making necessary changes to comply.   They wouldn't have bothered to "highlight" (which to me speaks of strongly emphasizing) the "risk" if they didn't think there was legitimate concern and risk.

Given the highlighted risk, the matter should have been clarified with the SEC.  That didn't happen.  They chose to ignore continue on despite the highlighted risk, without clarifying the law, and only changing practice when the SEC itself highlighted the same concerns.   

Because the EPA didn't have authority to make changes without church leadership approval, there would have been a legal obligation to discuss the highlighted risks with the church leadership in order for them to make legally informed decisions. 

[ttribe]

28 minutes ago, T-Shirt said:

I'm not sure how you get this. Here is the quote from the SEC:

There are a few things to consider here. First there is no mention of the auditors being ignored. Not changing their method of reporting based on the auditor's, rather mild, concern, does not mean they were ignored. Second, you will notice that the auditor had this conversation with senior management of Ensign Peak. There is no mention of any Church leaders involved in this discussion as you indicated. Third, the auditor did not tell them they were "violating SEC regulations" as you claim and they did not speak to Church leaders. They simply said the SEC might disagree with the approach. Fourth, the auditors offered no recommendations for any changes.

I've seen some pretty strong assumptions made about this particular paragraph and pretty much none of them have been accurate.

The word "mild" is never used and if something is brought up by internal audit, it is typically an area of concern, which is typically not "mild," either. Moreover, the way the Church's financial oversight is structured, the internal audit reports would have been sent to the Presiding Bishopric and the First Presidency.

[T-Shirt]

2 minutes ago, pogi said:

I think you too are making some assumptions about it.  You state it was a "rather mild concern".  You don't know that.  It could have stated that they were very concerned that the SEC might view things differently.  While they did not recommend any "specific" changes, they may have recommended looking into it further and making necessary changes to comply.   They wouldn't have bothered to "highlight" (which to me speaks of strongly emphasizing) the "risk" if they didn't think there was legitimate concern and risk.

Given the highlighted risk, the matter should have been clarified with the SEC.  That didn't happen.  They chose to ignore continue on despite the highlighted risk, without clarifying the law, and only changing practice when the SEC itself highlighted the same concerns.   

Because the EPA didn't have authority to make changes without church leadership approval, there would have been a legal obligation to discuss the highlighted risks with the church leadership in order for them to make legally informed decisions. 

Yes, the words "rather mild concern" were my opinion. That opinion was arrived at by what is actually provided by the SEC. You claim I made assumptions (plural) yet that is the only assumption I made in my comment. I could be wrong. The rest of my comment was using the actual content of the SEC's statement, correcting how many (including you) have wrongfully made claims about what was actually said.  The rest of your response is, quite frankly, one big litany of over-the-top and wild speculations that cannot be concluded by what was actually provided by the SEC in this paragraph.

[Snodgrassian]

1 hour ago, Kenngo1969 said:

The SEC said it, I believe it, and that settles it!  

Why would the church agree to a settlement that the SEC got wrong? I would think the Church had the chance to respond the report prior to its release. There is enough money on the funds to cover the court battle if the allegations were untrue/misleading. I honestly think the Church will end up spending more on the PR push they are faced with. 

[bluebell]

1 hour ago, jkwilliams said:

I'm trying to think of an explanation that makes more sense than the SEC's conclusion. 

Reasonable, but still, nothing that Harry posted was an established fact.

[SeekingUnderstanding]

1 hour ago, Harry T. Clark said:

I think it's time to just deal with the facts.  There were great lengths taken to keep the finances in the shadows to prevent a drop in tithing.  Unfortunately, we were misled.

 

1 hour ago, bluebell said:

How is that a fact though?

 

1 hour ago, Kenngo1969 said:

 

Because it's in an SEC document, and since someone at the SEC said it, it must, res ipsa loquitur and ipso facto, be true. 

Did I miss the part of the SEC document where it laid out the fact that the hiding was done to prevent a drop of tithing? I know the head of EPA said that at one point as a possible reason in an interview, but it was no where in the SEC document as I recall.

[rockpond]

14 hours ago, OGHoosier said:

Was talking about it with my dad, who is a CPA fwiw. 

His whole opinion was that this is the fruit of a Church that is too worried about optics...

That's no longer opinion or speculation.  The SEC order (which the First Presidency had to agree to as part of the settlement) states as much.  The First Presidency and Presiding Bishopric did not want the public to know about the portfolio.

[bluebell]

6 minutes ago, Snodgrassian said:

Why would the church agree to a settlement that the SEC got wrong? I would think the Church had the chance to respond the report prior to its release. There is enough money on the funds to cover the court battle if the allegations were untrue/misleading. I honestly think the Church will end up spending more on the PR push they are faced with. 

One possible explanation is that the church did not want to reveal their finances, and if this went to trial, that would likely be a part of it.

[rockpond]

2 minutes ago, SeekingUnderstanding said:

 

 

Did I miss the part of the SEC document where it laid out the fact that the hiding was done to prevent a drop of tithing? I know the head of EPA said that at one point as a possible reason in an interview, but it was no where in the SEC document as I recall.

No mention in the SEC that a drop in tithing was a concern.  Just the acknowledgment that the Church did not want information about the portfolio to become public knowledge.  Drop in tithing is a speculation.

That said, my opinion is that it was likely on their minds.  I know more and more people who are choosing to pay their tithes to other charitable organizations rather than increasing the Church's investment holdings.

[rockpond]

4 minutes ago, bluebell said:

One possible explanation is that the church did not want to reveal their finances, and if this went to trial, that would likely be a part of it.

If that's true, is it okay for the prophet to accept and agree to false statements about the church and church leader's integrity in order to keep church finances private?

[T-Shirt]

8 minutes ago, ttribe said:

The word "mild" is never used and if something is brought up by internal audit, it is typically an area of concern, which is typically not "mild," either. Moreover, the way the Church's financial oversight is structured, the internal audit reports would have been sent to the Presiding Bishopric and the First Presidency.

Good grief, I made one little statement of opinion in there and that is all you focus on. Yes, it appears mild to me, maybe I am wrong, but the rest of my statement is accurate as to what the SEC actually said. Many, (including you) have made statements about this that cannot be substantiated by what the SEC actually said. 

The SEC specifically said that the auditor's concern was stated to the senior management of Ensign Peak, not to Church leaders. The repot provided to the Church would not necessarily contain any of this conversation, you don't know and the information provided by the SEC does not provide enough information to conclude otherwise.

Now here is how I decided to use the words "rather mild".  In my mind, if the auditors had a serious concern, I feel that they would have offered some recommendations regarding changing the LLC structure, but they didn't. Additionally, according to the SEC, they specifically said that the SEC might not agree. A lot hinges on that little word "might", in my opinion. This just seems to not be a serious concern, I could be wrong, but you cannot deny that charges leveled at the Church by some in here, based on the actual words of the SEC have been accurate.

[ttribe]

3 minutes ago, T-Shirt said:

Good grief, I made one little statement of opinion in there and that is all you focus on. Yes, it appears mild to me, maybe I am wrong, but the rest of my statement is accurate as to what the SEC actually said. Many, (including you) have made statements about this that cannot be substantiated by what the SEC actually said. 

The SEC specifically said that the auditor's concern was stated to the senior management of Ensign Peak, not to Church leaders. The repot provided to the Church would not necessarily contain any of this conversation, you don't know and the information provided by the SEC does not provide enough information to conclude otherwise.

Now here is how I decided to use the words "rather mild".  In my mind, if the auditors had a serious concern, I feel that they would have offered some recommendations regarding changing the LLC structure, but they didn't. Additionally, according to the SEC, they specifically said that the SEC might not agree. A lot hinges on that little word "might", in my opinion. This just seems to not be a serious concern, I could be wrong, but you cannot deny that charges leveled at the Church by some in here, based on the actual words of the SEC have been accurate.

A copy of the internal audit report would have been provided to the First Presidency and the Presiding Bishopric since that's who the Church's internal audit department reports to. If it was "highlighted" in the report that means the issue rose to a level of concern significant enough to merit a discussion with EPA management. The internal auditors clearly felt there was a risk to be considered by both EPA and the Church.

Again, I have experience with internal audit departments, internal reporting structures, and SEC reporting issues.

Generally, I have not been commenting on the accuracy of accusations of various posters. I have commented that I have no reason to consider the SEC's report to be inaccurate.

[pogi]

35 minutes ago, T-Shirt said:

Yes, the words "rather mild concern" were my opinion. That opinion was arrived at by what is actually provided by the SEC. You claim I made assumptions (plural) yet that is the only assumption I made in my comment. I could be wrong. The rest of my comment was using the actual content of the SEC's statement, correcting how many (including you) have wrongfully made claims about what was actually said.  The rest of your response is, quite frankly, one big litany of over-the-top and wild speculations that cannot be concluded by what was actually provided by the SEC in this paragraph.

I haven't stated anything wild and over-the top.  I am simply emphasizing that the risk was "highlighted" by the CAD, that despite the warning it was not clarified with the SEC (that is a fact), and that as a fiduciary of the church, the EPA had a legal obligation to inform the decision makers (church leadership) of any potential legal risk that was highlighted by the CAD.    That is all fact. 

[rockpond]

3 minutes ago, ttribe said:

A copy of the internal audit report would have been provided to the First Presidency and the Presiding Bishopric since that's who the Church's internal audit department reports to. If it was "highlighted" in the report that means the issue rose to a level of concern significant enough to merit a discussion with EPA management. The internal auditors clearly felt there was a risk to be considered by both EPA and the Church.

Again, I have experience with internal audit departments, internal reporting structures, and SEC reporting issues.

Generally, I have not been commenting on the accuracy of accusations of various posters. I have commented that I have no reason to consider the SEC's report to be inaccurate.

If the First Presidency was not aware that they were violating SEC regulations in order to conceal the investment portfolio then they should not have agreed to the SEC order because that's what the order convicts them of. 

[Calm]

27 minutes ago, SeekingUnderstanding said:

 

 

Did I miss the part of the SEC document where it laid out the fact that the hiding was done to prevent a drop of tithing? I know the head of EPA said that at one point as a possible reason in an interview, but it was no where in the SEC document as I recall.

This is the only mention of the word “tithing” in the document:

Quote

The securities portfolio managed by Ensign Peak consists of what the Church calls “reserve funds” or “reserves,” which include U.S. equity and debt securities purchased with excess tithing, income and returns generated by Ensign Peak, and the assets of other Church integrated auxiliaries. Ensign Peak does not charge the Church management fees.

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

[T-Shirt]

Another thing I was thinking about is the fine of one million dollars to the Church. Based on the number of 37.8 billion being the value of the Church's securities, according to the SEC report, the Church's fine would be the equivalent of fining the salary of a person earning $200,000.00 per year a total of $5.20, or the total fine of five million being equivalent to fining the same salary $26.00.

Frankly, that's not even a slap on the wrist, it's more like going through their furniture to find some spare quarters. 

[T-Shirt]

10 minutes ago, pogi said:

I haven't stated anything wild and over-the top.  I am simply emphasizing that the risk was "highlighted" by the CAD, that despite the warning it was not clarified with the SEC (that is a fact), and that as a fiduciary of the church, the EPA had a legal obligation to inform the decision makers (church leadership) of any potential legal risk that was highlighted by the CAD.    That is all fact. 

None of this is fact, sorry.

[rockpond]

1 minute ago, T-Shirt said:

Another thing I was thinking about is the fine of one million dollars to the Church. Based on the number of 37.8 billion being the value of the Church's securities, according to the SEC report, the Church's fine would be the equivalent of fining the salary of a person earning $200,000.00 per year a total of $5.20, or the total fine of five million being equivalent to fining the same salary $26.00.

Frankly, that's not even a slap on the wrist, it's more like going through their furniture to find some spare quarters. 

True but the fine is $5 million* (admittedly that doesn't really change your point).

*EPA's money is the Church's money.

[rockpond]

2 minutes ago, T-Shirt said:

None of this is fact, sorry.

I'm curious (because I haven't read all 45 pages of posts here) -- is your position that the First Presidency is 100% innocent of having tried to hide the size and details of the Church's investment portfolio from the general public (and members)?

[ttribe]

2 minutes ago, T-Shirt said:

Another thing I was thinking about is the fine of one million dollars to the Church. Based on the number of 37.8 billion being the value of the Church's securities, according to the SEC report, the Church's fine would be the equivalent of fining the salary of a person earning $200,000.00 per year a total of $5.20, or the total fine of five million being equivalent to fining the same salary $26.00.

Frankly, that's not even a slap on the wrist, it's more like going through their furniture to find some spare quarters. 

Attempting to downplay the importance of what occurred in this matter by comparing the fine to the overall wealth of the Church is a backfiring strategy. The Church failed to properly file its disclosures with a regulator and did so in a way that the SEC determined was, at best, problematic. The significance of the fact that the Church was fined at all, and not just EPA, was a message being sent by the SEC that "senior Church leadership" had significant involvement in the development and maintenance of the reporting structure. Arguing that the fine is small relative to the Church's wealth also plays into the hands of critics who argue the Church shouldn't be asking for the widows mite when it can easily afford to consider $5M to be comparable to "going through their furniture to find some spare quarters." You're playing right into the hands of those critics, and I don't think you want that.

[T-Shirt]

14 minutes ago, ttribe said:

A copy of the internal audit report would have been provided to the First Presidency and the Presiding Bishopric since that's who the Church's internal audit department reports to. If it was "highlighted" in the report that means the issue rose to a level of concern significant enough to merit a discussion with EPA management. The internal auditors clearly felt there was a risk to be considered by both EPA and the Church.

Read the paragraph again. I think you may be assuming things beyond the actual words. Here it is:

Quote

In discussions with Ensign Peak’s senior management, although CAD did not recommend specific changes to the LLC Structure, CAD highlighted the risk that the SEC might disagree with the approach.

The word "highlighted" does not refer their report, as you claim, it refers to their discussion with Ensign Peak's senior management. People are reading into this much more than is there.