Ensign Peak Advisors — SEC Sanction of the LDS Investment Arm

What happened

Ensign Peak Advisors, Inc. (EPA) is the non-profit investment-management arm of the Church of Jesus Christ of Latter-day Saints, headquartered in Salt Lake City. Established in 1997, Ensign Peak manages the Church's primary investment portfolio — built up over decades from tithing-derived reserves not required for current Church operating expenditure. By 2018, the portfolio's value had reached approximately $32 billion in publicly-traded equity securities, with additional substantial holdings in private equity, real estate, and other asset classes.

Under section 13(f) of the Securities Exchange Act of 1934, institutional investment managers with discretionary control over $100 million or more in qualifying publicly-traded equity securities are required to file Form 13F quarterly, publicly disclosing their holdings of such securities.

The SEC's February 2023 Order found that, from 1997 through 2019 — across the full first 22 years of Ensign Peak's operation — Ensign Peak had filed Form 13F not in its own name but in the names of thirteen shell LLCs which the Order found Ensign Peak had created with the Church's knowledge and approval for the purpose of obscuring the size of the Church's equity portfolio. The shell LLCs were ostensibly headquartered in various locations across the United States and were nominally managed by Ensign Peak employees presented as the LLCs' principals. The SEC Order concluded that the LLCs lacked any genuine independent operating substance.

The SEC Order's published finding on motive: "The Church was concerned that disclosure of its portfolio, which by 2018 grew to approximately $32 billion, would lead to negative consequences."

The settlement

On 21 February 2023, the SEC announced the settlement of administrative proceedings against both Ensign Peak Advisors and the Church of Jesus Christ of Latter-day Saints itself. The Order included findings of violation of section 13(f), neither admitted nor denied by the respondents. The financial sanctions:

• Ensign Peak Advisors: civil penalty of $4 million.
• Church of Jesus Christ of Latter-day Saints: civil penalty of $1 million.

The total sanction of $5 million was paid in full. Ensign Peak adjusted its filings beginning in 2019 — prior to the public disclosure of the SEC investigation, but in evident response to the inquiry's progress — and from that point filed Form 13F in its own name, consolidating the previously-distributed holdings into a single aggregated report. As of the SEC announcement, Ensign Peak had filed thirteen subsequent quarterly Form 13F filings in compliance.

The whistleblower complaint

The SEC's investigation originated with a 2019 whistleblower complaint filed by David A. Nielsen, a former Ensign Peak senior portfolio manager who had left the firm in 2019. Nielsen's complaint — released by the Washington Post in December 2019 — alleged not only the Form 13F disclosure scheme but also that Ensign Peak's tax-exempt status was incompatible with its accumulation of investment reserves not deployed for any current charitable purpose. The IRS dimension of Nielsen's complaint did not produce parallel federal action; the SEC dimension produced the settlement above.

Church response

The Church issued a public statement on the day of the SEC settlement acknowledging the violation and accepting the penalty. The statement framed the Form-13F arrangement as a structural decision motivated by concern that disclosure of the full portfolio would distort investment markets, attract opportunistic litigation, or compromise the Church's broader operational discretion. The statement also affirmed the Church's continuing legal position that the investment reserves were appropriate for a religious institution's long-term financial planning. The Church declined to make public any revised disclosure of the full extent of its non-publicly-traded asset holdings.

Significance

The Ensign Peak settlement is the largest SEC enforcement action against a US religious institution on disclosure grounds, and the first major federal financial-regulatory sanction of the Church of Jesus Christ of Latter-day Saints. The 22-year duration of the underlying disclosure scheme, the $32 billion portfolio scale at the 2018 reference point, and the documented use of thirteen shell entities make the case the principal contemporary public-record reference on LDS Church financial governance. It opens to subsequent independent examination the larger structural questions about reserves accumulated through tithing that the IRS dimension of the original whistleblower complaint had raised but that did not produce parallel federal action.

Sources

• US Securities and Exchange Commission, In the Matter of Ensign Peak Advisors, Inc., and The Church of Jesus Christ of Latter-Day Saints, Securities Exchange Act Release No. 96951, 21 February 2023.
• US Securities and Exchange Commission, press release 2023-35, SEC Charges The Church of Jesus Christ of Latter-day Saints and Its Investment Management Company for Disclosure Failures and Misstated Filings, 21 February 2023.
• Washington Post, "Mormon Church has misled members on $100 billion tax-exempt investment fund, whistleblower says" (Jonathan O'Connell and Michelle Boorstein), 16 December 2019.
• Church of Jesus Christ of Latter-day Saints, statement on SEC settlement, 21 February 2023.
• David A. Nielsen, whistleblower complaint to the Internal Revenue Service, 27 November 2019 (public version).