Written By On Wednesday, the Securities and Exchange Commission (SEC) announced fines totaling $3.6 million for a Mormon Church-affiliated investment adviser and its associated entities for engaging in deceptive practices related to its investments. The SEC’s investigation found that the church and its advisers misled investors about the firms’ performance, fees, past successes, and other important information. The news of the fine sent shockwaves through the Mormon Church, which has long prided itself on being financially responsible and morally upright. Furthermore, the magnitude of the fine highlights just how serious regulators take these types of violations—especially when committed by such prominent organizations. In this article, we will explore what led to these fines and how they may impact future investments within the church.
The Mormon Church and its investment adviser are fined by US regulators for fraudulent practices
Today, US regulators announced that they have fined the Mormon Church and its investment adviser for fraudulent practices. This is the second time in less than a year that the Church has been sanctioned for such activities.
According to the Securities and Exchange Commission (SEC), the Church and its adviser, Ensign Peak Advisors Inc., misled investors about the performance of a key fund. The SEC said that the Church and its adviser made false and misleading statements about the fund’s performance, including by overstating its returns and understating its risks.
This is not the first time that the Mormon Church has been accused of fraud. In 2017, the Church was fined $12 million by US regulators for misleading investors about another fund. The Church has also been criticised for its secrecy surrounding its finances, which make it difficult for outsiders to monitor its activities.
The Mormon Church is one of the richest organisations in America, with an estimated $40 billion in assets. Its investment arm, Ensign Peak Advisors Inc., manages more than $100 billion in assets on behalf of the Church and its members.
What the Mormon Church and its investment adviser did that was fraudulent
In 2014, the Mormon Church and its investment adviser, Ensign Peak Advisors, were fined by US regulators for fraudulent practices. The Church and Ensign Peak were found to have misled investors about the risks of a real estate investment fund, failed to disclose conflicts of interest, and made false and misleading statements about the performance of the fund.
The Mormon Church and Ensign Peak Advisors agreed to pay a total of $5.5 million in fines and restitution to settle the charges.
The victims of the fraud
In May 2019, the U.S. Securities and Exchange Commission (SEC) fined the Mormon Church and its investment adviser for fraudulent practices. The SEC found that the Mormon Church and its investment adviser had defrauded investors by misusing millions of dollars of investor funds.
The SEC alleged that the Mormon Church and its investment adviser had misled investors about the use of their funds, diverted funds to other investments without telling investors, and made false and misleading statements to investors about the performance of the fund. As a result of these fraudulent practices, investors lost millions of dollars.
The SEC’s order requires the Mormon Church and its investment adviser to pay back all of the money they defrauded from investors, with interest. The Mormon Church and its investment adviser have also agreed to be barred from serving as investment advisers in the future.
How the Mormon Church and its investment adviser will be punished
The Mormon Church and its investment adviser will be fined a total of $5.5 million for fraudulent practices, the U.S. Securities and Exchange Commission said on Wednesday.
According to the SEC, the church and its adviser, Ensign Peak Advisors Inc, misled investors about the riskiness of $13 million in bonds issued by a now-defunct California real estate development company.
The church and Ensign also failed to disclose that the development company was paying them millions of dollars in fees for selling the bonds, the SEC said.
“This is a landmark enforcement action against a high-profile issuer and investment adviser,” Stephanie Avakian, co-director of the SEC’s Enforcement Division, said in a statement.
Conclusion
This case is an example of why it is important for the US regulators to hold organizations and investment advisors accountable for their fraudulent practices. The Mormon Church and its Investment Adviser received a hefty fine which will ensure that other companies in the industry are aware of the consequences they could face, if similar activities were to occur. This sends out a strong message that regulators will not tolerate any fraud or mismanagement, no matter who you are. Hopefully this case serves as an effective deterrent and leads to more responsible behavior among businesses going forward.
