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Church schism – Losses in tens of millions

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Investment losses of tens of million dollars have sparked a parishioners’ lawsuit and split the more than 2.6 million members of the roughly 6,000 churches in the Lutheran Church-Missouri Synod, The Wall Street Journal reported Nov. 21.

The losses followed investments in risky mortgage-backed securities by the Lutheran Church-Missouri Synod Foundation, the church’s money-management arm.

The foundation invested donors’ dollars and promised them a share of the return.

The losses led to the scrapping of plans for new chapels and expansions of universities and seminaries, the cutting of pensions and the slashing of payments to donors.

In September, 15 Lutherans sued the foundation, three of its executives and Vining Sparks Inc., a bond dealer in Memphis, Tenn., that the foundation used to invest the securities.

The lawsuit seeks class-action status for hundreds of donors and thousands of their beneficiaries.

The Journal said the controversy is an “object lesson for conservative institutions that, like mutual funds taunted by dot-com returns, feel pressured to beat the markets. The results can be disastrous for churches such as the Lutheran Church-Missouri Synod that already are struggling to impress donors.”

The foundation manages money for two seminaries, 10 universities, 20 geographic districts throughout the U.S. and a publishing house.

Assets managed by the foundation have gown to $900 million from $120 million in 1990, when federal regulators approved it as a registered investment adviser.

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