SEC investigating $100 billion investment fund owned by Mormon church

A $100 billion investment fund owned by the Church of Jesus Christ of Latter-day Saints is being investigated by the Securities and Exchange Commission, which believes the church tried to keep the massive portfolio secret, The Wall Street Journal reported late Friday.

Ensign Peak Advisors Inc., an investment management firm in Salt Lake City, is owned by the LDS Church, which is also headquartered there. The company only began disclosing its investments in SEC filings under that company name in February 2020, the newspaper said.

Certain investments, such as U.S.-listed stocks directly managed by the firm, must be disclosed in SEC filings. The Journal said those holdings “amounted to roughly $40 billion” as of Sept. 30.

The newspaper, citing “people familiar with the matter,” said the SEC investigation “is at an advanced stage … likely to lead to a settlement” soon. A fine is a likely outcome.

Church spokesman Doug Andersen told The Washington Times via email, “The Church works with many government regulators to ensure we are in compliance with the law. We take those responsibilities very seriously.”

The revelation of an SEC investigation and potential settlement came on the same day David A. Nielsen, a former employee of the investment firm, filed a 90-page memorandum with the Senate Finance Committee and its taxation and IRS oversight subcommittee. 

The document charges that Ensign Peak Advisors, a for-profit business, pretended to be a tax-exempt charitable organization.

Mr. Nielsen charges ”false statements, systematic accounting fraud, private inurement, violations of the Internal Revenue Code and other federal statutes, and a ‘Klein conspiracy,’” or an attempt to defraud the federal government by frustrating the lawful functions of the IRS. A Klein conspiracy is named after a 1957 case, United States v. Klein.

The document claims “for at least 22 years, [Ensign Peak Advisors] and certain senior executives have perpetrated an unlawful scheme that relies on willfully and materially false statements to the IRS and the SEC, so this for-profit, securities investment business that unfairly competes with large hedge funds can masquerade as a tax-exempt, charitable organization. In addition, evidencing private inurement, EPA’s senior managers for years have regularly permitted large assets to simply ‘disappear’ from EPA’s books and have failed to apply basic internal controls to themselves.”

ReligionUnplugged.com, an independent news service, first reported the Nielsen memorandum and broke the initial story of allegations that Ensign Peak Advisors registered as a nonprofit but did not make charitable distributions. 

Instead, the firm allegedly funneled $2 billion in assets to two profit-making businesses associated with the LDS Church, including the City Center real estate development in downtown Salt Lake City. The development abuts Temple Square, where the historic Salt Lake Temple and LDS Church administrative offices are housed.

The initial 2020 SEC filing from the investment firm indicated $38 billion in stock and mutual fund holdings, including $1.5 billion in shares of Apple Inc. and Microsoft Corp., along with $1 billion in Amazon and Alphabet, the parent company of Google.