Appraisers as fiduciaries? The ESOP Association submits comments to the DOL

BVWireIssue #101-2
February 9, 2011

Last week the ESOP Association submitted comments to the DOL on why the proposed regulation, “Definition of the Term Fiduciary” would harm private company ESOPs. The comments consisted of the following five main points:

  • Mandating any and all valuators of private company stock be fiduciaries will increase the cost of the valuation substantially
  • Establishing more efficient, less economically burdensome ways to ensure valuations are done properly without reducing ESOP companies’ profits is doable
  • This regulation will create potential lack of trustee prudent actions if the valuator services provider has an equal fiduciary role as a trustee
  • It will confuse the law on trustee decisions; and
  • It will create a big cost for ESOP companies arising from more private parties suing ESOP companies and their trustees in cases that currently Federal courts dismiss.

The ESOP Association’s comments are available hereBVWire will cover comments from some of the valuation associations next week.

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