Investment
Mormon church fined $5 million for scheme to hide $32 billion investment portfolio
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The Church of Jesus Christ of Latter-day Saints and its investment arm have been fined $5 million for using shell companies to obscure the size of its $32 billion portfolio, which was under church control, the U.S. Securities and Exchange Commission announced Tuesday.
The faith, known as the Mormon church, maintains billions of dollars of investments in stocks, bonds, real estate and agriculture. Much of its portfolio is controlled by Ensign Peak Advisers, a nonprofit investment manager overseen by ecclesiastical leaders known as its presiding bishopric.
The Mormon church was allegedly worried that the size of its portfolio, which reached $32 billion by 2018, would lead to “negative consequences,” according to the SEC. Ensign Peak avoided disclosing investments “with the church’s knowledge,” denying the SEC and the public accurate information required under law, Gurbir Grewal, the agency’s enforcement director, said in a statement.
The Mormon church “went to great lengths to avoid disclosing the Church’s investments,” Grewal said in the statement.
The church has agreed to pay $1 million and Ensign Peak will pay $4 million in penalties based on the violation.
Federal investigators said that, for a period of 22 years, the firm violated agency rules and the Securities Exchange Act by not filing required paperwork that disclosed the value of its assets.
Instead, they said Ensign Peak filed the forms through 13 shell companies the firm created, even as it maintained decision-making power. Ensign Peak also had “business managers,” most employed by the church, sign the required shell company filings.
Whistleblower allegations
Increasingly, the church and its Salt Lake City-based investment arm have faced scrutiny over the fact that tax law largely exempts religious groups from paying U.S. taxes. Ensign Peak is registered as a supporting organization and integrated auxiliary of the church. Investment managers of its size are required to report stock holdings quarterly.
In 2019, a whistleblower alleged the church had stockpiled nearly $100 billion in funds, rather than directing it toward charitable causes. Ensign Peak has since been a source of intrigue and mystery for the nearly 17-million member Utah-based faith, which encourages members worldwide to give 10% of their income in a practice known as “tithing.”
Two years later, prominent church member James Huntsman filed a lawsuit against the church alleging it misrepresented how it used donations and, rather than direct them to charitable causes, invested in assets including real estate and an insurance business. A judge dismissed the complaint last year and Huntsman later appealed the decision.
Earlier this month, the 2019 whistleblower, a former Ensign Peak investment manager named David Nielsen, submitted a 90-page memorandum to the U.S. Senate Finance Committee demanding oversight into the church’s finances.
In a statement, church officials said over the time period investigated, none of their holdings had gone unreported and all had been disclosed through the separate companies.
They said they had “relied upon legal counsel regarding how to comply with its reporting obligations while attempting to maintain the privacy of the portfolio” and noted that Ensign Peak had changed its reporting approach after learning of the SEC’s concerns in 2019.
“We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed,” they said.
Investment
Budget 2023 Includes Some Investment but Must Fully Address Urban Indigenous Realities in the Near Future – Financial Post
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OTTAWA, March 28, 2023 (GLOBE NEWSWIRE) — The National Association of Friendship Centres (NAFC) receives this 2023 federal budget with measured acknowledgement and urges future engagement. While the NAFC believes that Friendship Centres and urban Indigenous people will benefit from the investments in urban, rural, and northern Indigenous housing, including $4 billion over 7 years, starting in 2024-2025, to implement a co-developed Urban, Rural, and Northern Indigenous Housing Strategy, there are still gaps to be filled when addressing the realities of urban Indigenous communities.
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“We welcome the investments in urban Indigenous housing, but none of the other NAFC’s pre-budget submissions were announced,” said Kelly Benning, NAFC President. “The renewal of the UPIP program and the ongoing investments for Friendship Centres are crucial in order to help us support our communities and help the federal government meet its stated Reconciliation objectives. We fear that urban Indigenous peoples are being asked to wait once again.”
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Friendship Centres have a long and demonstrated history of effectively supporting the communities they serve. With comprehensive and supportive funding, NAFC member Friendship Centres will be able to continue to offer essential Indigenous-led programs and services. Investing in a well-resourced Friendship Centre Program contributes to meaningful economic growth and development for Friendship Centres and PTAs that directly builds up urban Indigenous people.
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“We have appreciated the opportunity to work collaboratively with this Government on a wide range of issues, and we have demonstrated our ability to be effective,” said Jocelyn Formsma, NAFC CEO. “It will be crucial for the federal government to engage with us to fully bridge the gap that urban Indigenous communities face when trying to access critical supports. We are confident that this is the ultimate goal for all.”
In their pre-budget submission, the NAFC requested that the Government of Canada ahead of the budget to (1) re-establish ongoing Friendship Centre funding at a minimum of $60 million per year, (2) invest in urban Indigenous children and youth by re-establishing a national Indigenous youth program and Indigenous children’s strategy at a minimum of $23 million per year, (3) invest in urban Indigenous infrastructure, including for-Indigenous-by-Indigenous housing and homelessness response offered by Friendship Centres through a minimum of $180 million per year, and (4) support urban Indigenous employment and training, including upskilling and reskilling, through $16 million per year to employment and training initiatives provided through FCs, develop, and implement new initiatives, and reduce barriers to employment for urban Indigenous people.
The National Association of Friendship Centres is a network of over 100 Friendship Centres and Provincial/Territorial Associations, which make up part of the Friendship Centre Movement–Canada’s most significant national network of self-determined Indigenous owned and operated civil society community hubs offering programs, services and supports to urban Indigenous people.
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Cryptocurrency, a decentralized digital or virtual currency protected by cryptography, is taking the world by storm. Since Bitcoin’s debut in 2009, its popularity has been steadily increasing – and now, with no sign of slowing down! In 2023 there will be several exciting cryptocurrency trends to keep an eye on.
Crypto markets are maturing at a rapid rate. With the adoption of digital crypto assets by governments and institutional investors on the rise, 2023 looks to be an exciting year for crypto enthusiasts! We’ll explore developments in decentralized finance, key regulatory moves that are helping shape this expanding domain, as well as how more countries continue to adopt their forms of digital currency.
Cryptocurrency in the DeFi Sector
In recent years, the cryptocurrency industry has seen explosive growth as it evolves at a rapid pace. Cryptocurrencies are virtual assets that use cryptography to protect their transactions and regulate the production of new currencies. These digital coins do not succumb to any centralized power or government body since they are fully decentralized in nature.
Cryptocurrency has experienced a surge of growth in the DeFi crypto sector, and this trend is predicted to blossom further in 2023. The power behind decentralized finance lies within blockchain technology. It allows for financial services to be delivered without any third-party intermediation. This essentially cuts out banks or other institutions from being involved, which offers people greater accessibility and control over their finances!
As cryptocurrency continues to grow and evolve, 2023 is set to be a groundbreaking year for the industry. Thanks in part to advancements making DeFi applications more user-friendly, we can expect an abundance of new financial products and services offered by decentralized crypto exchange (DEX), lending platforms, stablecoins, and much more! What’s also exciting is the increasing number of regulatory frameworks being developed worldwide – indicating that governments are beginning their journey towards embracing cryptocurrencies while ensuring they remain safe from misuse. All eyes will surely be on what further developments emerge this coming year!
Crypto Regulations Increased
Recently, the European Union and the United States have made moves to bring cryptocurrencies under closer regulatory oversight. The EU has proposed a framework designed to combat money laundering and terrorism activities while the SEC is focused on cracking down by way of Initial Coin Offerings (ICOs) as well as other measures. These steps are aimed at creating an environment where investors can feel secure in digital asset investments both locally and internationally.
Increased regulation of cryptocurrency has been met with mixed reactions in the industry, but it is an important step for greater legitimacy and stability. Not only does this assure existing investors, but it also encourages institutional investment that would otherwise remain hesitant due to a lack of regulatory clarity. With better oversight over the crypto market comes stronger confidence in its future – both from individual traders and major financial organizations alike.
As digital currencies become more and more mainstream, governments across the world are taking note. China has been leading this charge with its innovative Digital Yuan – a revolutionary financial toolset to challenge traditional banking systems as we know them. Currently, in test-mode, it’s expected that the Digital Yuan will be fully rolled out by 2023 and could potentially have an immense impact on global finance!
In 2023, the world of digital currencies is expected to undergo a sweeping transformation with exciting innovations. Governments around the globe will continue to explore ways in which digital currency can revolutionize financial accessibility while simultaneously reducing costs typically associated with traditional payment systems.
Crypto Trends – The FTX Collapse
The crypto industry has been dealt a disastrous blow with the collapse of one of its largest exchanges, FTX. Its repercussions have sent shockwaves throughout the market and shaken investor confidence in digital assets to its core. With overall market capitalization on a downward trajectory and liquidity issues afflicting many firms, 2023 promises only further turmoil as regulatory clarity is still lacking. This could cause difficulties for DeFi protocols too while potentially hampering NFTs’ growth opportunities this year – there’s no doubt that cryptocurrencies are facing an uphill battle ahead!
Meme Cryptocurrencies
Dogecoin may have been born out of an Internet joke, but 2021 proved it to be a serious contender within the cryptocurrency space. Influencers like Elon Musk and Mark Cuban along with Naomi Osaka’s co-signs aided its rise in popularity this year. As crypto continues evolving on the verge of mass adoption, we can expect some seismic changes happening across all financial markets around the world – making for one exciting era indeed!
Crypto Betting on the Rise
In today’s rapidly changing digital landscape, crypto betting has become the latest trend. As more and more people seek out quicker ways to get their bets in on sports events, politics, or entertainment news – cryptocurrency has surged as a preferred option for quick transactions with the ease of accessibility. 2023 saw an unprecedented increase in demand across all areas related to crypto gambling due largely to advancements within technology which enabled these assets as payment methods that are now accepted worldwide by many industries. Betting is no longer what it used to be: its evolution reflects how far we’ve come since then! Therefore, nothing prevents you from betting on your favorite sport or playing online roulette with real money using any cryptocurrency.
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What are we looking for?
Top-rated mutual funds with top-rated investment processes.
The screen
When investors look at the performance of mutual funds, they are likely looking for something simple – are those performance numbers positive or negative? Considering why those numbers are positive or negative is also important. Why a fund performs a certain way can be the direct result of its investment philosophy and process. An understanding of these components can help investors better gauge if performance results are expected given the goal and method applied. This can be particularly helpful during periods of volatility, such as the one we have experienced since the collapse of Silicon Valley Bank earlier this month. A strong investment process is well-defined and consistently executed, and generally able to withstand short-term market shocks and reward investors over the long term.
A fund’s investment process can be nuanced. To help guide investors, Morningstar’s manager research team assigns ratings to Canadian funds and ETFs that include an explicit component focused on understanding their investment philosophy and process. We refer to this component as the “Process” pillar and rate each asset manager as either Low, Below Average, Average, Above Average or High, depending on the efficacy of their practices. To highlight a few great mutual funds available to Canadians with top-rated investment processes, I used Morningstar Direct to screen more than 3,400 Canadian-domiciled mutual funds and ETFs to find a selection of options to consider. The criteria include:
- A Morningstar Quantitative or Analyst Process Pillar rating of High, indicating the fund has a clearly defined investment process and performance objective that is repeatable and implemented effectively.
- A Morningstar star rating of five stars. The star rating is an objective look back at a fund’s after-fee, risk-adjusted returns relative to the category to which the fund belongs. Though the measure is backward-looking, Morningstar’s research shows that over time and on aggregate, five-star funds continue to outperform four-star funds, three-star funds, etc., after receiving the rating.
- A top quintile category rank month-to-date indicating the funds selected have outperformed their peers since March 1, 2023.
*Data as of March 23, 2023
What we found
The list above highlights funds from 13 different mutual fund categories (as defined by the Canadian Investment Fund Standards Committee) from six different asset managers, indicating strong processes are not confined to a specific asset class or investment style. Although not explicitly screened for, each of these funds also earned a Bronze, Silver or Gold Morningstar Analyst or Quantitative Rating indicating a forward-looking view of the fund’s ability to outperform its peer group and/or relevant benchmark on a risk-adjusted basis over a full market cycle. Every fund on the list has delivered, with all but two ranking in the top decile of their respective categories over the past five years.
Note that the management expense ratios listed here are reflective of the f-share class. In the table, f-class (also known as fee-based share classes) shares exclude the cost of advice and are held in fee-based accounts where the adviser charges separately for advice.
This article does not constitute financial advice. Investors are encouraged to conduct their own independent research before purchasing any of the investments listed here.
Danielle LeClair, MFin, is director of manager research, Canada for Morningstar Research Inc.
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Budget 2023 Includes Some Investment but Must Fully Address Urban Indigenous Realities in the Near Future – Financial Post
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