The Mormon Church and its investment management company have agreed to pay a massive $5 million settlement for deceiving the public by hiding roughly $32 billion worth of investment assets.

The church confirmed the allegations after a top executive said that the billions of investments were hidden partly because they were worried that its members would no longer donate if they knew how much money the church had in its possession.

Mormon Church Hid $32 Billion in Investments

On Tuesday, the U.S. Securities and Exchange Commission charged the Church of Jesus Christ of Latter-day Saints and Esign Peak Advisers Inc., the church's investment management company, for disclosure failures and misstated filings. The SEC said that the church and its investment management company went to great lengths to avoid disclosing the investments. This deprived the Commission and the investing public of accurate market information.

A story published in 2020 noted that officials said Ensign Peak's investment fund, considered one of the largest worldwide, was designed to be like a rainy day account that would be used during difficult economic times, as per Business Insider.

The head of the church's investment management company, Roger Clarke, said that church leaders raised the alarm over knowledge of the fund potentially discouraging members from giving regular donations that are known as tithes.

Two years ago, Clarke said paying to tithe was a sense of commitment much more than the church needing the money for itself. He noted that this was why church leaders did not want to be in a position where their members would not make such contributions.

It was only in 2019 when the scale of the church's wealth was in full view after a former employee of Ensign Peak Advisors, David Nielsen, made a whistleblower complaint. Previous reports noted that the Mormon Church's investment portfolio included billions of dollars in Apple, Microsoft, and healthcare stocks.

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Paying a $5 Million Settlement

The church was found to have used shell companies to mask its growing investments from the public. From 1997 and 2019, those shell companies were used to file mandatory forms detailing the investments and improperly claimed to operate independently, according to Yahoo News.

The reality was that all of the investments were controlled by Ensign Peak, and the church was well aware of the arrangement where its employees were heading the majority of the shell companies.

Experts argued that while it was not rare for the SEC to pursue cases with a religious angle, a fine assessed against the Mormon Church, which is relatively large, was considered unusual. According to the Public Religion Research Institute, the Mormon Church represents roughly 1% of Americans.

A partner at Willkie Farr & Gallagher LLP, Adam Aderton, the former co-head of the SEC's asset management unit, said that the agency routinely conducts enforcement actions with a faith-based angle. However, he noted that charges against a religious organization are unusual.

In a Tuesday statement, the LDS said Ensign Peak and the church were cooperating with the government for further actions. They said they affirmed their commitment to comply with the law and expressed their regret for their mistakes, said CNN.

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