The U.S. Department of Labor (DOL) and First Bankers Trust Services Inc. (FBTS) have entered into a settlement agreement resolving a lawsuit challenging FBTS' performance as trustee in a transaction whereby a private-label denim manufacturer was sold to an employee stock ownership plan (ESOP). The agreement essentially mirrors the DOL/GreatBanc Fiduciary Process Agreement that covers ESOP transactions and valuation issues.

What to do: “It is important for all parties involved in an ESOP transaction to consider both the FBTS and GBTC agreements—and the differences between them—in order to understand the DOL's perspective as to the duties of ESOP trustees and their financial advisors in such transactions,” says an analysis of the two agreements by Holland & Knight.

After the GreatBanc agreement was issued, valuation analysts began to incorporate relevant parts of it into their reports, such as additional boilerplate language and more explanation and documentation. ESOP trustees will make sure the valuation process is consistent with what the agreement covers. Not knowing the GreatBanc agreement “actually got quite a few [valuation] firms bumped off of our approved list,” says ESOP trustee Tracy Woolsey (Horizon Trust & Investment Management) in an article, “How ESOP Trustees Size Up a Potential Valuation Analyst.”