Church fined by SEC

[ksfisher]

1 minute ago, CA Steve said:

I'll bet the fund in question has grown more than the fine itself just since this thread has started.

If so then I should be looking at Ensign Peak's holdings and follow their investing lead.  The market is down today and my personal little IRA down with it.

[pogi]

51 minutes ago, carbon dioxide said:

I would not mind transparency but the reality is the same people who complain about the lack of transparency are the same people who will complain when the church is transparent.

I somehow doubt that the church attempted to mislead and conceal in order to placate complainers.  If I am wrong, then I would be even more concerned about all of this.  

[SeekingUnderstanding]

10 minutes ago, pogi said:

I'd be shocked if they were not aware of the legal risks as raised by the CAD .  If that information was not brought to the brethren to consider in part of their decision making process, somebodies head is on the chopping block. 

Anyone that approves the use of multiple shell companies knows exactly what they are doing. 

[ttribe]

8 minutes ago, JustAnAustralian said:

Assuming I'm reading it right,

 

The thing that gets me (and this is probably more an issue with US securities law), is that if they church had created 13 full ensign peak equivalents (not just shell companies) and split the investments across them, we wouldn't be having this discussion.

It would still be making it harder to see the full size of the church's investment, but the sec couldn't do anything.

All 13 would need to be self-directed, not managed by the original parent. That's a principal source of the problem, here.

[Pyreaux]

3 minutes ago, SeekingUnderstanding said:

Anyone that approves the use of multiple shell companies knows exactly what they are doing. 

That it's normally the smart move?

[Calm]

25 minutes ago, SteveO said:

ith stuff like this, I never attribute malice when stupidity or, in this case ignorance, can be applied.

Same here. 

[Tacenda]

1 hour ago, carbon dioxide said:

I would not mind transparency but the reality is the same people who complain about the lack of transparency are the same people who will complain when the church is transparent.  They was be mad that the church is spending money on this, not spending money on that.  There is always a group of people who will complain no matter what that church does.  So for those who ask for transparency, I say good and when the church becomes transparent, they need to at that point shut up.

I'm glad these things come out and think the church is ever increasing donations.

[ttribe]

2 minutes ago, Pyreaux said:

That it's normally the smart move?

"...normally the smart move..." for what? In some cases it may be, in other cases not at all.

[Calm]

11 minutes ago, ksfisher said:

If so then I should be looking at Ensign Peak's holdings and follow their investing lead.  The market is down today and my personal little IRA down with it.

[pogi]

51 minutes ago, SeekingUnderstanding said:

Anyone that approves the use of multiple shell companies knows exactly what they are doing. 

Well, I feel fairly confident that this started at the top, and is a top-down issue (as everything in the church seems to be). 

Quote

The church was concerned that disclosure of its porfolio would lead to negative consequences. 

...So, they advise their financial and legal counsel to find a way to legally conceal their portfolio.   That in and of itself is ethically questionable, I think, but may have been justified by legitimate concerns (first potential mistake).  What happened after that is the question.  Were they told that creating these shell companies was completely and unquestionably legal, as reports seem to claim (the church seems to be attempting to dodge any and all blame by hiding behind legal counsel), or were they made aware of the risks and gray legal territory as any reasonable legal advisor worth anything would be obligated to reveal?   Did they know of the risk?  If they made a decision to move forward without seeking clarity from the SEC first after having been warned of the risk, that would be the second mistake.

Edited February 21, 2023 by pogi

[Teancum]

2 hours ago, Pyreaux said:

The only reason?

Typically with something like this yes.

 

2 hours ago, Pyreaux said:

I know your world of possibilities is small,

You seem to have a habit of making personal snide remarks. Does it make you feel special?

 

2 hours ago, Pyreaux said:

 

but LLCs are a legal way to make a tax shelter,

I am a tax professional and quite aware of such things. EPA is not subject to tax though so pick a better reason.

 

2 hours ago, Pyreaux said:

 

if only Ensign was willing to relinquish its control over them.

Control over what?  The LLCs?

 

 

2 hours ago, Pyreaux said:

 

The church may have approved the LLCs, but it looks like Ensign was too incompetent to do something, that was legal, correctly.

So EPA, a group that manages billions for the church is incompetent of such reporting requirements?  FYI I also hold security licenses and most competent  professionals in this pace know about reporting requirements that are highly regulated and that can cause then all sorts of problems if they run afoul of them. I cannot imagine the EPA team was not aware of such things.

2 hours ago, Pyreaux said:

 

If it were sinisterly "hiding" money, I'd imagine someone would be imprisoned for fraud instead of fined for "improper paperwork". Only the biased would insist otherwise now that the matter has been settled in court. Settlements don't always answer who's guilty of what and why, it's just the easiest way to resolve what could be a longer legal dispute.

It is not a settlement. It is a fine.  Which means they agreed to wrong doing.

Edited February 21, 2023 by Teancum

[california boy]

2 hours ago, Nofear said:

The Deseret News article made the following claim (not cited unfortunately), "Some church officials said previously that they wanted to avoid church members following church investments as a roadmap for personal investing because they might not be appropriate to their circumstances."

Given the propensity of some members to think that the Church can do no error, this makes a great deal of sense (as if we members learned nothing from the Kirtland financial incident). So, yes, it was a deliberate effort to conceal within what legal counsel suggested was within the boundaries of legality. A misguided effort, perhaps, but it wasn't for nefarious purposes designed to inflate the Church's wealth. If accurate it was to shield the Church's behavior from foolhardy members.

Ensign Peak/LDS Church civil penalty of 5 million dollars. Total civil penalties levied of about 4.2 billion dollars. 760 enforcement actions. Average civil penalty was about 5.6 million dollars.

 

It seems like a lot of people on this board are rallying around this idea as a reason the Church set up shell companies to hide it's investments.  But if I am reading the information correctly, the Church got rid of the shell companies in 2019 and now comply with the law.

Isn't their portfolio and investments still not available to the church members?  Have members started mirroring Church investments since 2019?  If not, why not?

This seems more like some kind of excuse to justify hiding money in shell companies to avoid compliance just to make members feel better about the reason to hide the money.

Maybe I am wrong.  It doesn't make a lot of sense to me.  Since it does to you, could you explain why mirroring the Church's investments hasn't happened in the 4 years they have been in compliance?

[Pyreaux]

23 minutes ago, ttribe said:

"...normally the smart move..." for what? In some cases it may be, in other cases not at all.

Normal for keeping your capital, definitely. Normal for keeping it private from the public, I'm not so sure. Don't hate the player; hate the game. If you bash on shell companies by virtue that they are shell companies, you should direct your ire to changing the laws; not vilify the citizens that have no reason to disclose or pay more than they legally have to.

Edited February 21, 2023 by Pyreaux

[ttribe]

1 minute ago, Pyreaux said:

Normal for keeping your capital, definitely. Normal for keeping it private from the public, I'm not so sure. Don't hate the player; hate the game. If you bash on shell companies by virtue that they are shell companies, you should direct your ire to changing the tax codes; not vilify the citizens that have no reason to pay more of their money than they have to.

None of these actions had anything to do with taxes in this case. I'm not sure why you are bringing that up.

[webbles]

18 minutes ago, Teancum said:

It is not a settlement. It is a fine.  Which means they agreed to wrong doing.

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".

[SteveO]

13 minutes ago, california boy said:

It seems like a lot of people on this board are rallying around this idea as a reason the Church set up shell companies to hide it's investments.  But if I am reading the information correctly, the Church got rid of the shell companies in 2019 and now comply with the law.

Isn't their portfolio and investments still not available to the church members?  Have members started mirroring Church investments since 2019?  If not, why not?

This seems more like some kind of excuse to justify hiding money in shell companies to avoid compliance just to make members feel better about the reason to hide the money.

Maybe I am wrong.  It doesn't make a lot of sense to me.  Since it does to you, could you explain why mirroring the Church's investments hasn't happened in the 4 years they have been in compliance?

https://markets.businessinsider.com/news/stocks/mormon-church-stock-portfolio-top-10-holdings-ensign-peak-advisors-2023-2?amp
 

https://www.yahoo.com/now/mormon-church-15-biggest-stock-195558119.html

https://fintel.io/i/ensign-peak-advisors-inc
 

https://whalewisdom.com/filer/ensign-peak-advisors-inc

https://stockzoa.com/fund/ensign-peak-advisors-inc/

https://wallmine.com/fund/4f5/ensign-peak-advisors-inc.amp

https://www.nasdaq.com/market-activity/institutional-portfolio/ensign-peak-advisors-inc-798919

[ksfisher]

14 minutes ago, california boy said:

It seems like a lot of people on this board are rallying around this idea as a reason the Church set up shell companies to hide it's investments.  But if I am reading the information correctly, the Church got rid of the shell companies in 2019 and now comply with the law.

Isn't their portfolio and investments still not available to the church members?  Have members started mirroring Church investments since 2019?  If not, why not?

This seems more like some kind of excuse to justify hiding money in shell companies to avoid compliance just to make members feel better about the reason to hide the money.

Maybe I am wrong.  It doesn't make a lot of sense to me.  Since it does to you, could you explain why mirroring the Church's investments hasn't happened in the 4 years they have been in compliance?

Personally, I have looked at Ensign Peak's portfolio and made a purchase or two based on what they are doing.

[Pyreaux]

18 minutes ago, ttribe said:

None of these actions had anything to do with taxes in this case. I'm not sure why you are bringing that up.

I was attempting to address that automatically assuming the term "shell company" is all that needs to be said to imply something unethical. I'm not here 100%, so I'll go sit in the corner and stay quiet for now.

[ttribe]

From the Order:

21. Each Clone LLC was set up with a “Business Manager,” who, according to the
terms of the LLC agreements, had responsibility for “the preparation and filing of the Company’s
governmental reports, returns, notices and the like, including reports required by law of investment
managers or entities exercising investment discretion.” However, the Business Managers
performed no functions for the Clone LLCs outside of signing the Form 13F signature pages each
quarter.
 

22. Ensign Peak was responsible for designating the Clone LLCs’ Business Managers,
many of whom were Church employees. Business Managers were selected because they had
common names and a limited presence on social media, and were therefore less likely to be
publicly connected to Ensign Peak or the Church. Ensign Peak provided the Business Managers
very limited information about the Clone LLCs or why they were created.
 

23. Each Clone LLC was given an address outside of Utah although none of them
conducted any business at those locations other than the receipt of mail. Ensign Peak chose
multiple locations across the country for these purported offices to create the impression that the
Clone LLCs conducted business operations throughout the U.S., making it more difficult to trace
the Clone LLCs back to Ensign Peak or the Church.

24. Each Clone LLC was also assigned a local phone number that would go directly to
voicemail. An Ensign Peak senior manager instructed a Business Manager of one of the Clone
LLCs to notify him of all voicemails from regulatory agencies to any of the Clone LLCs, but to
delete all others.

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."

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

[bluebell]

Just now, ttribe said:

From the Order:

21. Each Clone LLC was set up with a “Business Manager,” who, according to the
terms of the LLC agreements, had responsibility for “the preparation and filing of the Company’s
governmental reports, returns, notices and the like, including reports required by law of investment
managers or entities exercising investment discretion.” However, the Business Managers
performed no functions for the Clone LLCs outside of signing the Form 13F signature pages each
quarter.
 

22. Ensign Peak was responsible for designating the Clone LLCs’ Business Managers,
many of whom were Church employees. Business Managers were selected because they had
common names and a limited presence on social media, and were therefore less likely to be
publicly connected to Ensign Peak or the Church. Ensign Peak provided the Business Managers
very limited information about the Clone LLCs or why they were created.
 

23. Each Clone LLC was given an address outside of Utah although none of them
conducted any business at those locations other than the receipt of mail. Ensign Peak chose
multiple locations across the country for these purported offices to create the impression that the
Clone LLCs conducted business operations throughout the U.S., making it more difficult to trace
the Clone LLCs back to Ensign Peak or the Church.

24. Each Clone LLC was also assigned a local phone number that would go directly to
voicemail. An Ensign Peak senior manager instructed a Business Manager of one of the Clone
LLCs to notify him of all voicemails from regulatory agencies to any of the Clone LLCs, but to
delete all others.

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."

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

Speaking only for myself, I'm not suggesting that the act of keeping the portfolios (or whatever they are called) private and unknown was accidental or a mistake.  I'm saying that it sounds like they thought they could do it legally but were mistaken on that issue.

[pogi]

50 minutes ago, california boy said:

It seems like a lot of people on this board are rallying around this idea as a reason the Church set up shell companies to hide it's investments.  

I think the church is less concerned about people copying their investments and blaming them in troubled financial times, and more concerned about this:

Quote

Roger Clarke, who leads Ensign Peak, has said that part of the reason the Church sought to conceal its wealth was to ensure continued tithing by believers.

https://finance.yahoo.com/finance/news/mormon-church-hid-32-billion-182800651.html
https://qz.com/the-mormon-church-hid-32-billion-in-shell-companies-1850140376

Along with criticisms for not giving enough to charity if people knew how much they had.  

Deeply troubling if this is an accurate quote from Roger Clarke.  

Edited February 21, 2023 by pogi

[ttribe]

8 minutes ago, bluebell said:

Speaking only for myself, I'm not suggesting that the act of keeping the portfolios (or whatever they are called) private and unknown was accidental or a mistake.  I'm saying that it sounds like they thought they could do it legally but were mistaken on that issue.

IMO, the "mistake" could have been to create the entities in the first place; that I can see. But these specific actions go beyond just creating some entities to hold assets.

[SteveO]

5 minutes ago, ttribe said:

IMO, the "mistake" could have been to create the entities in the first place; that I can see. But these specific actions go beyond just creating some entities to hold assets.

It wasn’t creating shells that got them into trouble, it was because they weren’t subsidiaries but still granting full voting rights to the church.  From what I understand.

[bluebell]

6 minutes ago, ttribe said:

IMO, the "mistake" could have been to create the entities in the first place; that I can see. But these specific actions go beyond just creating some entities to hold assets.

Do the legal actions go beyond just creating some entities to hold assets?  Because while I can understand why some might not like that the church was keeping assets from public knowledge (especially anyone who is already disposed to interpret any action by the church in the worst possible light), I don't find that to be a moral issue in and of itself.

I'm just interested in the legal issues.

[SteveO]

12 minutes ago, pogi said:

I think the church is less concerned about people copying their investments and blaming them in troubled financial times, and more concerned about this:

Along with criticisms for not giving enough to charity if people knew how much they had.  

Deeply troubling if this is an accurate quote from Roger Clarke.  

For such a sensational sentence from Clarke, that better damn well have a quote.  
 

Garbage journalism.