The Church of Jesus Christ of Latter-day Saints (LDS Church) and its investment arm have agreed to pay fines totaling $5 million following an investigation by the U.S. Securities and Exchange Commission (SEC) into the use of shell companies to obscure the control and size of the church’s $32 billion portfolio, the Associated Press reports.

The LDS Church, often referred to as the Mormon Church, has agreed to pay $1 million, and Ensign Peak Advisers—a nonprofit investment management company owned by the church—will pay $4 million in penalties. The SEC found that, over a 22-year period, Ensign Peak violated agency rules and the Securities Exchange Act by creating more than a dozen shell companies to distribute church assets and directing church employees, serving as business managers, to sign corporate documents that “obscured the church’s portfolio and misstated Ensign Peak’s control over the church’s investment decisions.”

The church noted in a statement that Ensign Peak had “received and relied upon legal counsel regarding how to comply with its reporting obligations while attempting to maintain the privacy of the portfolio” and, since June 2019, had been “in full accordance with SEC requirements.” The church added, “[w]e affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed.”

“We allege that the LDS Church’s investment manager, with the church’s knowledge, went to great lengths to avoid disclosing the church’s investments, depriving the commission and the investing public of accurate market information,” said SEC division of enforcement director Gurbir S. Grewal. “The requirement to file timely and accurate information…applies to all institutional investment managers, including nonprofit and charitable organizations.”

(Photo credit: Getty Images/Krysta Hastings)