The $5 million penalty imposed on The Church of Jesus Christ of Latter-day Saints by the Securities and Exchange Commission has now been paid. In its defense, the church admits and regrets “mistakes made” and considers “the matter closed,” as the fine has been satisfied.
The First Presidency has been clear that no more need be said or done, and we should all be assured that the church intends to obey the law going forward. Evidently, the leaders and all faithful members can be expected to carry on, confident that no harm was done and matters have been rectified.
Clearly, it was important enough to LDS Church leaders, known to be legally very well-advised, to risk such a penalty in order to maintain secrecy of their investment portfolio. Reasons for keeping the amount from the public vary among observers. The staggering size of these stock investments has been reported to be in the tens of billions of dollars, without even counting worldwide real estate properties, among the most extensive in the world. In 1997 the church set up a separate business to manage $7 billion, a portion of its stock portfolio, recently reported in the Deseret News to have risen to $44 billion in marketable securities.
If those numbers are even close, the fine of a mere $5 million might have been worth the risk, except that cat is out of the bag. And a big cat it is.
What does it really matter anyway, though, as members have long known that the combination of tithing and prudent investments, not even including those vast real estate holdings, puts the church right there with the Fortune 500 richest companies. It doesn’t take an MBA to figure that out.
Apparently though, it does matter to the First Presidency, who oversee all finances, because a February 2020 Wall Street Journal article revealed their concern that if members knew how massive the church’s wealth is, they might not be so willing to pay tithing. Others have speculated that with its huge holdings in certain securities, members might follow the church’s lead and invest in those companies.
Whatever the reason, it mattered enough that an elaborate system was practiced for some 20 years to obscure amounts. So for two decades “mistakes [were] made” that involved repeated instances of breaking the law.
The SEC reported that “with the church’s knowledge its managers went to great lengths to avoid disclosing” these investments, creating 13 “empty shell” companies across the U.S., by which no actual business was transacted. By breaking up their immense portfolio into these smaller unrelated entities, each worth at least $100 million, the church’s holdings wouldn’t look as massive.
Shell companies are commonly used by corporations for various tax and reporting reasons. But they require compliance with quarterly accountability to assure the SEC of proper management. This is where the church repeatedly failed to comply.
Whether any of these details matter, one thing is clear. This is a church.
Yes, technically it qualifies as a corporation and can play by those secular rules. Yet, a problem remains — maybe the only real problem. Breaking mere tax law pales in comparison with ignoring needs of the sick and poor, and Utah’s environmental crises — toxic air and shrinking Great Salt Lake. Billions of dollars are just sitting there while people are homeless, hungry and dying, and while the Lake dries up without the needed attention that these means could easily meet.
According to that same Wall Street Journal article, the church operates on $5 billion a year, offset annually by investment profits and tithing. If even $1 billion more than it’s doing now were allocated to establishing Zion, seeing that there is “no poor among them,” it could be allocated to desperate needs and just causes.
Imagine the power of consecrating its stock investment portfolio to greater human problem solving. This member thinks donations would actually increase and bring the church far more favorable attention for doing even more good than it does. Church members and the public are watching to see what greater good can come from public knowledge of its wealth.
Finally, it’s time for the church to galvanize public trust through financial transparency in a world so bereft of trust in institutional religions.
Giles Florence, Salt Lake City, is an educator and writer and serves on several conservation and preservation boards that serve the common good.