[enraged_camel]

It should be proportionate to the size of the fund, because one of the reasons fines exist is for the deterrence effect. Ideally you want other potential perpetrators to think twice. Do you think this small fine has that effect?

[tptacek]

Can you support with evidence the idea that Ensign Peak is just going to blow off the fine and pay 5MM every few years instead of filing 13Fs? Because if they start reliably filing 13Fs, they've refuted this argument.

If there's a distinctive harm that we can draw out from the LDS Church failure to file 13Fs, I'm all ears about scaling up the penalties accordingly. But otherwise, the logic we're using applies to literally any offense Ensign Peak could have committed, no matter how marginal. I guess I'd like to start by working out whether this particular offense was marginal, or material.

[pchristensen]

From their statement: https://newsroom.churchofjesuschrist.org/article/church-issu...

"In June 2019, the SEC first expressed concern about Ensign Peak’s reporting approach. Ensign Peak adjusted its approach and began filing a single aggregated report. Since that time, 13 quarterly reports have been filed in full accordance with SEC requirements."

[PragmaticPulp]

> Can you support with evidence the idea that Ensign Peak is just going to blow off the fine and pay 5MM every few years instead of filing 13Fs?

The parent comment very clearly said “other perpetrators”.

I agree: Such a small fine is basically encouragement for other groups to commit the same violations. When the downsides are so negligible small, there is basically no risk for duplicating the bad behavior. If you get caught, pay a token fine and move on.

[tptacek]

I understand. But if the offense is itself marginal, it doesn't make sense to inflict disproportionate punishment on one offender; the penalty still needs to bear some relationship to the offense! We don't, like, arrest Ferrari drivers for violating a no-turn-on-red sign so as to prevent other rich assholes from ignoring the sign. They get the same ticket everyone else does, and if they keep doing it, eventually we suspend their license.

[ryandrake]

A fine (or in this case settlement) has to be somewhat painful in order to deter. I remember a story about Steve Jobs never getting a license plate and always parking in spaces reserved for disabled people, and so on. He just ate the fines and continued the behavior because they were trivial to someone with his fortune.

If OP's numbers are correct, the fine in this case amounts to 0.015% of assets under management--far lower than what anyone would pay a money manager to manage their investments. I'm sure no other potential violator would feel it necessary to change their behavior if they knew their penalty was 0.015%.

[anigbrowl]

These guys (at Ensign Peak) kept doing it for ~20 years, and when they were worried about discovery by third parties their response was not to clean up their act but to iterate upon it.

I don't understand why you are equating a single enforcement action with a single offense. We don't just suspect they did it more often, we know. And they knew that it was wrong. Settling for future compliance as sufficient just incentivizes others to lie in the future.

[burkaman]

The risk is not that Ensign Peak will keep doing this, it's that other people who are committing the same violation as we speak will now continue to do it until they're caught because they know there will be no noticeable penalty.

If it's easier to understand, just consider how much the SEC had to spend litigating this for 4 years. Now every time they come across this particular crime they'll have to spend at least that much, because the perpetrators will know there is no risk in fighting them, and nobody will preemptively stop before an investigation.

[yieldcrv]

so what? the SEC can easily fuck around and get their entire charter invalidated by Congress or the court if they go after the wrong organization, nearly every creature of the New Deal got the same fate and the SEC operates right at the edge of its authority and constitutional rationality already.

and its not even clear if 13F filings are that important, aside from "its mandated by the SEC", Ensign Peak didn't challenge this, they got a tap on the shoulders after their lawyer's solution was questioned, and they changed their tactics. Leave it up to someone else to actually challenge it.

A tiny settlement is best. Its a joke, I agree with that, but it is also rational.

[komali2]

I feel like if BP got deleted by fines after one oil spill this argument would hold.

As it stands it appears companies treat fines the expected way: just cost of doing business.

[tptacek]

Right, so if failing to file 25 years worth of correct 13Fs for subsidiaries is equivalent to a BP oil spill, I'll agree with you that the fine should be much higher. Is it?

[svachalek]

This is how things work in the world of big money. "I dare say, old chap, that was hardly sporting of you. Harumph, harumph. Well, I'll see you at the club on Tuesday."