The Department said the Maran Inc. ESOP was allowed to purchase overvalued company stock. First Bankers Trust Services Inc. was hired as an independent fiduciary and trustee in connection with the company’s ESOP to determine whether, and at what price, to purchase shares of Maran Inc. from majority shareholders.
The suit alleges that First Bankers Trust Services violated the Employee Retirement Income Security Act (ERISA) when, in late 2006, it approved the ESOP’s purchase of 49% of the outstanding stock of Maran Inc. for approximately $71 million, which was more than fair market value. As a result, ESOP participants suffered significant losses.
The suit, filed in the U.S. District Court for the Southern District of New York, seeks to recover all losses and have First Bankers Trust Services enjoined from serving as a fiduciary to ESOP plans.
“ESOP participants depend on the plan to buy and sell sponsor-company stock at fair market value,” said Jonathan Kay, regional director of the Labor Department’s Employee Benefits Security Administration’s New York regional office. “The department is committed to making sure that the ones responsible for making these decisions are fulfilling their fiduciary duties to protect the interests of the ESOP participants.”