Members of Congress Ask Trump to Protect ESOPs

///Members of Congress Ask Trump to Protect ESOPs

Members of Congress Ask Trump to Protect ESOPs

Just as the ERISA Industry Committee (ERIC) did regarding the issue of missing participants in retirement plans, a group of legislators is calling out the Department of Labor (DOL) for engaging in enforcement activities against employee stock ownership plans (ESOPs) without providing meaningful guidance.

Twenty-seven members of Congress sent a letter to President Donald Trump saying the DOL “has released very little guidance on substantive issues including, for example, valuation.”  The letter was also sent to Secretary of Labor Alexander Acosta, Assistant Secretary of Labor Preston Rutledge and Solicitor of Labor Kate O’Scannlain.

According to the letter, the lack of guidance has made it difficult for ESOP companies to make business decisions and find someone to serve as plan fiduciary. “The Department has also employed counter-productive enforcement tactics, including taking inconsistent positions on legal issues. Ultimately, this investigatory approach is having a destabilizing effect on employee ownership, which ESOP companies fear will result in material losses for workers,” the letter says.

The letter points out several examples of what it calls “regulation through litigation” cited by ESOP companies.

The members of Congress ask that Trump help protect ESOPs. Specifically, the letter says, the DOL should eliminate regulatory uncertainty by collaborating with the ESOP community to develop clear guidance regarding valuation and other important issues. “Furthermore, the Department should consider immediately halting controversial oversight practices currently in use while the agency develops more efficient investigatory mechanisms that limit the burdens and costs on small businesses,” the letter says.

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