According to a news release, the association contended that establishing more efficient, less economically burdensome ways to ensure valuations are done properly without reducing ESOP companies’ profits is doable. The association is also concerned that the new rule will create a potential lack of trustee prudent actions if the valuator services provider has an equal fiduciary role as a trustee; confuse the law on trustee decisions; and create a big cost for ESOP companies arising from more private parties suing ESOP companies and their trustees in cases that Federal courts currently dismiss.
“Nearly 91% of corporate members of The ESOP Association are small businesses that have fewer than 500 employees that are not traded on the public stock market. These ESOP companies have pride in their ownership structures and we feel these proposed changes are not in the best interest of average pay employees,” said ESOP Association President J. Michael Keeling, according to the news release. “This proposed regulation will weaken companies providing local jobs; companies that are overwhelmingly furnishing average pay employees with significant retirement savings. We believe the DOL is mistakenly seeking the perfect at the expense of the good.”Other commenters have expressed similar concerns (see Fiduciary Expansion Proposal Could Hurt ESOPs: Commenters).