The Department of Labor (DOL) will abandon the “appraiser-as-fiduciary” rule from its planned reproposal of a broader fiduciary rule, according to a report in Capital Action, a publication of the American Society of Appraisers. The proposed rule, in limbo for three years, would have classified appraisers as ERISA fiduciaries in connection with valuations of employee stock ownership plans (ESOPs).
Sigh of relief: Opponents of the proposed rule claimed that it would create a conflict between a fiduciary’s strict duty of loyalty to plan participants and professional appraisal standards, which require an appraiser to perform assignments with impartiality, objectivity, and independence. Appraisers also feared that the rule would force them to buy expensive fiduciary insurance, hire specialized counsel, and expose them to unwarranted litigation. “This likely would have made the provision of ESOP valuations cost prohibitive for all but the largest firms,” says the ASA report.
BVWire is pleased to acknowledge the efforts of the ASA and other organizations and individuals who urged the DOL to rethink its position.