ERISA Litigation and Employee Stock Ownership Plans: The Evolving Landscape of Claims Against Fiduciaries

Recording of a 90-minute premium CLE video webinar with Q&A

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Conducted on Wednesday, April 7, 2021

Recorded event now available

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Course Materials

This CLE course will guide counsel on procedures and fiduciary responsibilities in employee stock ownership plan (ESOP) transactions and cover recent court rulings. The panel will discuss best practices in satisfying fiduciary duties in ESOP transactions, legal issues that arise, and lessons learned from recent cases to defend against and minimize litigation.


An ESOP is a tax-qualified defined contribution employee benefit plan that invests in the plan sponsor's stock. ERISA provides strict rules for trustees and administrators of ESOPs, and transactions involving ESOPs may lead to regulatory investigations or litigation.

An array of complex issues arise when an ESOP company purchases or sells stock. ESOP fiduciaries are faced with important ERISA fiduciary standards and valuation issues.

Most lawsuits concerning these transactions typically involve claims that (1) selling shareholders sold their stock in the plan sponsor to the ESOP at an inflated price; (2) claims that fiduciaries of the ESOP took insufficient action to protect the interests of participants, particularly when the plan sponsor faced financial difficulties; or (3) management or other purchasers bought the ESOP's shares for less than they were worth.

ESOP litigation involving publicly traded companies is evolving as well. In January 2020, the Supreme Court vacated a Second Circuit decision in Retirement Plans Committee of IBM v. Jander that had held that participants in an ESOP adequately alleged a breach of fiduciary duty by asserting that the price of company stock was artificially inflated and that fiduciaries should have disclosed losses to one of the company’s divisions that had been concealed. Thereafter, when the Second Circuit reinstated its original decision, the Supreme Court declined to hear the case again, potentially providing a new path for other plaintiffs to pursue “stock drop” claims against fiduciaries of ESOPs holding publicly traded company stock.

Listen as our panel discusses best practices in satisfying fiduciary duties in ESOP transactions, legal issues that arise, and lessons learned from recent litigation to defend and minimize litigation.



  1. Fiduciary duties, policies, and procedures of ESOP transactions
  2. Recent court rulings and developments
  3. Fiduciary review process: projections, documentation, and reliance
  4. Valuation considerations
  5. Best practices for defending and minimizing litigation


The panel will review these and other key issues:

  • Recognizing DOL standards for fiduciaries in ESOP transactions
  • Understanding the necessary policies and procedures to be followed by trustees and other fiduciaries of ESOPs
  • Lessons from recent ESOP litigation, including new theories of liability
  • Proper documentation of valuation reports and other due diligence
  • Critical steps during the fiduciary review process and avoiding litigation


Abouchedid, Sean
Sean Abouchedid

Groom Law Group

Mr. Abouchedid handles ERISA litigation matters in courts across the country. He has represented plan sponsors,...  |  Read More

Bortscheller, Mary
Mary J. Bortscheller

Cohen Milstein Sellers & Toll

Ms. Bortscheller is a Partner at Cohen Milstein and a member of the firm’s Employee Benefits Practice Group. In...  |  Read More

Faucher, Joseph
Joseph C. Faucher

Trucker Huss

Mr. Faucher has been litigating ERISA matters and other employee benefit related cases for nearly 30 years. His...  |  Read More

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