Elder M Russell Ballard’s Colorful History With the SEC

Before M Russell Ballard was an apostle, he is praised as a successful businessman. He was involved in various business pursuits in Utah. He was the top-selling salesman for his father’s Nash car dealership, which he left and in the late 1950s put his efforts into being the first Edsel car dealer in Salt Lake City. Sadly, his efforts came up completely short and he later refers to this time as “without doubt the darkest period” of his business career in his Our Search for Happiness book.

Investigated by the SEC for fraudulent activities

However, after this period, he became the President of Keystone Securities Corporation where he was quickly investigated by the Securities Exchange Commission after being accused of violating the law, and then upon finding the accusations true, the license of his company was revoked. This may be found to be a darker period perhaps? These violations look very similar to the recent SEC violations of the church.

Wikipedia does a nice job summarizing the events:

In 1961, Ballard was the president of Keystone Securities Corporation in Salt Lake City. The Securities and Exchange Commission opened an investigation into Keystone in 1962 after accusations that Ballard and Keystone had violated the Securities and Exchange Act of 1934 and the Securities Act of 1933. The investigation centered around “manipulation and fraud.” The SEC completed its investigation in 1963. Keystone, with Ballard as the primary cause, was found to have violated the Securities Act of 1933 in the following charges: providing false statements to the SEC, and aiding and abetting Shasta Mineral and Chemical Company in making false statements that included misrepresenting the relationships of the Shasta officers with both Ballard and Keystone. The SEC revoked the broker-dealer registration of Keystone as a result.
https://en.wikipedia.org/wiki/M._Russell_Ballard

M Russell Ballard was Charged with Violations in 1962

Violations were reported to the SEC when Ballard and the company violated federal laws. They reportedly registered with false and misleading information while omitting facts and filing false financial statements. Ballard engaged in activities of “fraud and deceit” for the purpose of conditioning and inducing investors to purchase stock in his company.

VIOLATIONS CHARGED TO KEYSTONE SECURITIES.
The SEC has ordered proceedings under the Securities Exchange Act of 1934 to determine whether Keystone Securities Corp., of 826 South Main Street, Salt Lake City, violate, prohibitions of that Act and the Securities Act of 1933 against manipulation and fraud and, if so, whether itl broker-dealer registration should be revoked.
Keystone has been registered with the Commission as a broker-dealer since July 12, 1961, and M. R. (Russell) Ballard, Jr., is its president. In its order, the Commission recites charges of its staff that information developed in an investigation tends to show that certain activities of keystone and Ballard with respect to Shasta Hinerals and Chemical Company violated the said provisions of the Federal securities laws. Shasta filed a registration statement with the Commission in April 1961 proposing the public offering of 500,000 shares of Shasta common at $2.50 per share. That statement, as amended, names Keystone as underwriter. The staff charges that the Shasta registration statement (against which “stop order” proceedings are pending under the Securities Act) contains false and misleading information and omits material facts with respect to the following, and that Keystone and Ballard aided and abetted Shasta in its filing: (a) prior sales of Shasta stock in violation of Section 17 of the Securitiea Act and the true facts surrounding a January and February 1961 rescission offer by Shasta; (b) financial statements and the financial condition of Shasta; (c) the relationship of Shasta, its promoters and management officials, with Keystone and Ballard; (d) the activities of Shasta, Kay L. Stoker and others in the offer and sale of Shaata stock in violation of Sections 5 and 17(a) of the Securities Act; and (e) the fact that Phelps-Dodge Corporation withdrew from its joint-venture with Shasta because the results were unfavorable from the standpoint of Phelps-Dodge.
The Staff further charges that, in the offer and sale of Shasta common during the period January to November 1961, Keystone and Ballard engaged in activities which operated as a “fraud and deceit” upon certain persons in that (1) in addition to the foregoing, and for the purpose of conditioning and inducing investors to purchase Shasta stock to be offered under the said regiatration statement, they offered and sold Shasta shares at prices ranging from $1.50 to $1.60 per share to certain members of the Shasta-Stoker group, which prices were in excess of those previously charged public investors; and (2) distributed a letter to Shasta shareholders for the purpose of inducing their purchase of Shasta shares to be offered under the registration statement, and included therein certain false and misleading information, including that with respect to the stage of development, nature of and potential value of Shasta’s mining properties. The filing of a false financial statement by Keystone and its violation of the Coommissions record-keeping requirements also are charged by the staff.
A hearing will be held, at a time and place to be announced, for the purpose of taking evidence to determine whether the staff charges are true, and, if so, whether Keystone’s broker-dealer registration should be revoked.
Securities and Exchange Commission News Digest
A brief summary of financial proposals filed with and actions by the S.E.C.
July 24, 1962

Ballard has Registration Revoked in 1963

Ballard is found guilty of making false and misleading statements and even of filing a false financial statement. Due to these violations, his registration is revoked.

"M Russell Ballard, president and a principal stockholder of the firm, was found a cause of the revocation order" for "making false and misleading statements" and "filed with the Commission a false financial statement and violated the Exchange Act bookkeeping requirements" - SEC in 1963 Regarding Elder M Russell Ballard — “M Russell Ballard, president and a principal stockholder of the firm, was found a cause of the revocation order” for “making false and misleading statements” and “filed with the Commission a false financial statement and violated the Exchange Act bookkeeping requirements” – SEC in 1963 Regarding Elder M Russell Ballard

REGISTRATION OF KEYSTONE SECURITIES REVOKED.
In a decision announced today (Release 34-7095) the SEC revoked the broker-dealer registration of Keystone Securities Corp., 816 South Main St., Salt Lake City, Utah. M. Russell Ballard, Jr., president and a principal stockholder of the firm, was found a cause of the revocation order. In its decision, the Commission found that Keystone and Ballard violated Sections 7 and 10 of the Securities Act of 1933 in that they aided and abetted Shasta Minerals and Chemical Company in making false and misleading statements in a registration statement filed by Shasta regarding prior sales of Shasta stock in violation of the Securities Act anti-fraud provisions, financial statements and financial condition and prior activities of Shasta, and the relationships of Shasta and its officers, directors and promoters with Keystone and Ballard. The Commission also found that Keystone filed with the Commission a false financial statement and violated the Exchange Act bookkeeping requirements.
Securities and Exchange Commission News Digest
A brief summary of financial proposals filed with and actions by the S.E.C.
July 10, 1963

One would think that this was his darkest hour, he’d just been found guilty of fraud! But, the future was bright. His Wikipedia bio continues, claiming “a highlight of Ballard’s business career was his presidency of the Valley Music Hall” which offered family entertainment. The music hall failed financially, but investors recovered their money when the LDS Church purchased the building. Smooth move Ballard. So he was a car salesman, failed at running a dealership, failed with his Keystone Securities Corporation due to massive fraud and being shut down by the SEC, then he runs a music hall which failed financially, but he is able to sell it to the church still. Somehow he is called as a Mission President and becomes a General Authority of the church.

As far as service in the church, Ballard was called and served as a bishop twice, and then as a mission president of the Toronto area just eleven years later in 1974. Then during his tenure as mission president, he was called into the Quorum of the Seventy in 1976. He was a member of the Presidency of the Seventy from 1980 until 1985 and after less than a decade he was called into the top leadership council. In 1985 joined the Quorum of the Twelve as an Apostle.

The church must have been watching his story and hoped he’d learned the lesson of getting caught by the SEC. Maybe his ideas were what led the church to get into very similar trouble recently. This sounds eerily similar to what the church and Ensign Peak just came to a settlement with the same SEC. We see instances where church leaders are not honest in their dealings with their fellow men but somehow are called to be leaders of the church. Plenty more evidence suggests that’s exactly how the church was started! It’s very troubling then to be told by church leaders that criticizing leaders is wrong, even when the criticism is true! Is M Russell Ballard honest in his dealings with his fellow man? Looks like he’s only as honest as he knows how to be.

How have these SEC violations from Elder Ballard or the violations of the First Presidency and Ensign Peak affected your testimony in church leadership? Are the leaders infallible? Is the church infallible? What about the allegations that Elder Ballard shared tithing donor information with Tim Ballard of OUR providing them with a wealthy donor list? Tell what you have felt through this surprise, and add your Mormon story to the collection of “I was a Mormon” stories.

More reading: