Legislative Proposal Could Provide Relief for ESOPs and ESOP ValuatorsJune 27, 2011, 02:09 PM
The Department of Labor (DOL) recently proposed a new regulation that could negatively impact sponsors of Employee Stock Ownership Plans (ESOPs). Under this proposed rule, valuation firms that provide appraisals of ESOP companies would be deemed to constitute fiduciaries for purposes of ERISA, a change which would increase the potential liability faced by valuation firm and would accordingly make it more difficult and costly for ESOP companies to obtain their required annual appraisal. Senators Ayotte, Snowe, Collins, Brown, and Landrieu are sponsoring a free standing legislative proposal that will provide protection for ESOP valuators from the proposed DOL regulation. S. 1232 will modify the definition of fiduciary under ERISA to exclude valuators of ESOPs. We believe that S. 1232 will protect ESOPs by preventing the unnecessary increase in administrative that would result if the proposed DOL regulation becomes finalized. Please consider asking Senators Warner and Webb to co-Sponsor S. 1232. We ask that all ESOPs in the Commonwealth of Virginia draft letters urging Senators Warner and Webb to co-Sponsor and support S. 1232, as well as employee ownership in general. Click here for a suggested form letter, the text of which can be copied and printed under your company’s letterhead.