The ESOP Association Files Amicus Brief in Citigroup ERISA Litigation

by The ESOP Association | Mar 30, 2010

March 30, 2010 (Washington, DC) - On March 25, 2010, The ESOP Association filed an Amicus Brief in the Citigroup ERISA litigation. The case is currently on appeal from the U.S. District Court for the Southern District of New York. The Association is asking the court to affirm the district court ruling that the defendants are not liable for breach of fiduciary duty.

At issue in this case is the important role that ESOPs (employee stock ownership plans) play both as retirement and employee ownership vehicles. The Association believes that courts examining ESOPs need to be mindful that ESOP investments are intended to have long-term goals and are often offered as part of a diversified portfolio.

"This case has the potential for far-reaching effects on ESOP plan creation, design, and administration," said J. Michael Keeling, president of The ESOP Association. "The court cannot ignore the wishes of Congress to encourage the formation of ESOPs as long-term ownership plans, as well as, long term retirement vehicles."

"Particularly disturbing is that on behalf of the Administration, the Department of Labor (DOL) has filed an amicus in this case that supports a position that undermines Congressional wishes since 1974 to encourage employee ownership through ESOPs," said Keeling. "The DOL says, in essence, drop the ESOP stock should there be a temporary drop in share value or face the wrath for a supposed violation of ERISA."

Keeling went on to say, "Frankly, if the DOL wants to curtail employee stock ownership, let's take the debate to the halls of Congress not the Federal court system. Even though Federal courts have consistently recognized Congressional support of ESOPs, the ESOP community stands ready to have a debate with ESOP cynics. Over 30 years of solid research shows that employee stock ownership preserves good paying jobs, creates higher performing companies, and provides substantial wealth for average pay employees."

To read the brief, click here.

The ESOP Association is the national trade association for companies with employee stock ownership plans (ESOPs) and the leading voice in America for employee ownership. The core cause of The ESOP Association is the belief that employee ownership will improve American competitiveness, increase productivity through greater employee participation, and strengthen our free enterprise economy.