Fiduciary Compliance in ESOP Transactions: Recent DOL Settlement Agreements

Implications of GBTC, FBTS and Alpha Settlement Agreements, Guidance for Avoiding Litigation

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


Conducted on Tuesday, May 22, 2018

Recorded event now available

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Program Materials

This CLE webinar will guide counsel on rules and procedures governing fiduciary and compliance responsibilities of trustees and advisers in ESOP transactions. The panel will discuss the implications of recent Department of Labor (DOL) settlement agreements, such as the FBTS and Alpha agreements, and best practices in satisfying fiduciary duties in ESOP transactions and avoiding litigation.

Description

The DOL's ESOP enforcement project has continued its focus on valuation issues regarding ESOPs established by privately held companies throughout 2017. Most often, the DOL has focused on the reasonableness and reliability of valuations, which, if not undertaken correctly, can lead to the ESOP paying too much for shares of employer stock. The DOL’s focus on valuation issues has resulted in several enforcement actions and settlement agreements that now serve as guidance to fiduciaries and counsel.

The DOL entered into a settlement agreement with GreatBanc Trust Co. (the GBTC agreement) in 2014.Since then, the GBTC agreement has become an accepted guide for the due diligence process for ESOP transactions, providing trustees with guidelines and procedures to satisfy their fiduciary duties in ESOP transactions. Those procedures were expanded at the end of 2017 by the DOL’s settlement agreements with First Bankers Trust Services Inc. (the FBTS agreement) and Alpha Investment Consulting Group LLC (the Alpha agreement).

The most pertinent elements of these settlement agreements focus on the selection of valuation advisers, oversight of appraisers, financial statements and document preservation, and the fiduciary review process. Counsel must recognize the differences and additions of each settlement agreement to understand the DOL’s perspective on the duties of ESOP trustees and advisors in such transactions.

Listen as our panel provide guide to counsel on rules and procedures governing fiduciary and compliance responsibilities of trustees and advisers in ESOP transactions, implications of recent DOL settlement agreements and best practices in satisfying fiduciary duties in ESOP transactions and avoiding litigation.

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Outline

  1. Overview of fiduciary duties, policies and procedures of ESOP transactions
  2. The impact of DOL settlement agreement with First Bankers Trust Services
  3. Detailed requirements of selecting valuation advisers and oversight of appraisors
  4. Fiduciary review process: projections, documentation and reliance
  5. Implications of the recent Alpha settlement agreement

Benefits

The panel will review these and other crucial issues:

  • Recognizing DOL standards for fiduciaries in ESOP transactions from the GBTC settlement agreement
  • Understanding the necessary policies and procedures to be followed by trustees or other fiduciaries of ESOPs
  • Selecting a valuation advisor and recognizing the requirements and procedures the adviser must follow
  • Proper documentation of valuation reports and transaction agreements
  • Critical steps during the fiduciary review process and avoiding litigation

Faculty

Burriss, Eliot
Eliot T. (Eli) Burriss

Partner
McDermott Will & Emery

Mr. Burriss litigates complex commercial disputes throughout the United States, serving as counsel to global...  |  Read More

Nemeth, J. Christian
J. Christian Nemeth

Partner
McDemott Will & Emery

J. Christian (Chris) Nemeth provides legal counsel on complex commercial litigation and government investigations,...  |  Read More

Watson, Roberta
Roberta Casper Watson

Partner
The Wagner Law Group

Ms. Watson focuses on ERISA and employee benefits. She concentrates on a wide array of areas including, pension and...  |  Read More

Rickard, Emily
Emily Rickard

Atty
McDermott Will & Emery

Ms. Rickard focuses her practice on  employee benefits matters. In addition to employee benefits, she concentrates...  |  Read More

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