The American Bar Association Section on Taxation sent a letter in December 2012 to Assistant Secretary of Labor, the Honorable Phyllis C. Borzi, discussing the DOL’s proposed regulation on the definition of a fiduciary. The letter makes a number of recommendations to the proposed regulation including information on valuation which would impact ESOP companies. The recommendation states: “We recommend that Final Regulations provide that a person who provides advice, or an appraisal or fairness opinion, concerning the value of securities or other property (“Valuation Information”), including with regard to employer securities, without providing any advice regarding whether to consummate a proposed transaction, even where rendered in connection with an acquisition or disposition of such property (e.g., by an ESOP) will not be a fiduciary.” (Information found on page 3 of letter.)
“While the DOL continues to pursue the proposed regulation on the definition of a fiduciary, comments such as this one from the American Bar Association filter in opposing the regulation and pointing out flaws in the DOL’s thinking. One has to wonder why the DOL is being so persistent in pushing this regulation,” said ESOP Association President, J. Michael Keeling.