The Department of Labor sued Sonnax Industries, company officers and ESOP fiduciaries Tommy Harmon and Frederick Fritz, and Illinois-based First Bankers Trust Services Inc. in December 2016, alleging the fiduciaries had the plan overpay for Sonnax Industries stock by millions of dollars.
The mixed decision comes after DOL moved for summary judgement; the defendants responded by moving to exclude key testimony from a DOL expert on the doctrine of “adequate consideration.”
A new website launched by Principal seeks to help business owners and their advisers talk through the possibilities of creating an employee stock ownership plan as part of a broader ownership transition.
Both, one in the House and one in the Senate, have bipartisan support
The appellate court agreed with a lower court that plaintiffs did not meet pleading standards set forth in the Supreme Court ruling in Fifth Third v. Dudenhoeffer.
The DOL alleged in all three cases that the firm approved transactions without undertaking the due diligence required of an ERISA fiduciary.
The court granted summary judgment to the plaintiffs and ordered their benefits be paid along with prejudgment interest.
An investigation by EBSA found the owner of a laser surgery center in New York to have violated ERISA guidelines regarding company valuation for an ESOP purchase.
Plaintiffs attempt in their complaint to establish that fraud was at least potentially occurring, and that this should have been enough to prevent plan fiduciaries from continuing to offer employer stock to participants.
One experienced benefits attorney says he has seen employee stock ownership plans do a whole lot of good for a lot of people during the course of his career—and he wants to see more.
The court found trustee Wilmington Trust “rushed its evaluation of the ESOP, failed to follow its own policies, and failed to adequately vet [other valuators’] conclusions.”
“Anyone who received income from equity compensation or sold shares in 2016 must understand the related reporting on IRS tax forms to avoid costly errors on tax returns.”