Yesterday we shared the latest timing update that the revised DOL ESOP Fiduciary Regulations will be available in July 2012 (or later). The Department of Labor Wants to Redefine “Fiduciary” to Include ESOP Appraisers. Why? discusses how the DOL has still not provided a meaningful analysis of the improper ESOP stock appraisals they cite nor quantified the extent of the problem. The article provides an overview and analysis of the proposed regulations, discusses valuation industry recommendations, and provides an update on the status of the revised proposed regulations:
The DOL was publicly rebuked on July 26, 2011 by the Congressional Subcommittee on Health, Employment, Labor and Pensions chaired by Representative Phil Roe, MD (R-TN). Representative Roe assailed the DOL for proposing rule changes that will likely disrupt stable, effective relationships between retirement savers and service providers. The DOL was not prepared to justify the need for such regulatory changes and facing pressure, so they withdrew the proposed regulation with a pledge to re-propose the intended rule. However, they still have the authority to implement the proposed regulation as they elect. While the proposed regulation has come under increasing criticism, the effort to modify or rescind it requires diligence on the part of the appraisal industry and the ESOP community. Contacting legislative representatives is one of the most effective strategies to communicate with the DOL.