ESOP Legislative Bulletin - DOL Campaign: Not Winning: ESOP Community Needs to Be Active

by The ESOP Association | Apr 01, 2011

In a recent news article, Assistant Solicitor of DOL, Ted Hauser said, “The Labor Department is set (emphasis added) with its position on valuation firms…” Thus, ESOP voices are not at this time having significant impact on altering the basic position proposed by DOL that all appraisers of private company ESOP stock be ERISA fiduciaries.

Unfortunately, the ESOP issue embedded in the Department of Labor’s proposed new definition of who is an ERISA fiduciary has fallen in importance in the eyes of key members of Congress and the Department of Labor officials.

Why?  The DOL proposal also negatively impacts financial institutions administering IRAs, mutual funds offering IRAs, and 401(k) plans, and major financial businesses providing financial advice.  Members of Congress of the key committees are justifiably aware the 401(k) market is much, much larger than the ESOP marketplace for those selling services to their plans and many more Americans participate in these plans.  (The key committees in this campaign are the House Committees on Education and Workforce; Ways and Means; and Appropriations, and the Senate Committees on Health, Education, Labor, and Pensions; Finance; and Appropriations.)

The fact is these businesses handle trillions of dollars, and have expertly mounted a significant campaign to persuade members of Congress to protest, and to threaten to overturn the DOL proposal as it impacts their interests.

Not surprisingly, key Republican members of Congress have heeded their concerns, and have registered protests to DOL.

Not surprisingly, in this day of sharp partisanship in Congress, Democratic leaders are taking positions contra to their Republican colleagues, and writing to the Secretary of Labor supporting the DOL proposal.

But to the knowledge of The ESOP Association neither Republicans nor Democrats, except for five members, say anything about ESOPs!

The five members of Congress who have conveyed concerns about DOL’s proposal to mandate that an appraiser of private company ESOP stock be fiduciaries are Senators Bernie Sanders (I-VT), and Patrick Leahy (D-VT), Congressmen Maurice Hinchey (D-NY), Charles Boustany (R-LA) and Geoff Davis (R-KY). 

Many ESOP advocates have written their Senators and Representatives.

f you can, please let us know what your Senators and/or Representatives have done, as this list of five may be incomplete.  No matter when the campaign ends (probably fourth quarter of this year) the ESOP community needs to express appreciation to their elected officials who stood up for ESOPs.

DOL staffers have fanned out to key Congressional offices, making an effective argument to Congressional staff that the ESOP proposal is a minor tweak that will not impact “good” ESOPs and their “qualified” appraisers.  (Keep in mind, these DOL staffers would not give our side of the argument about this proposal to members of Congress or their aides.)

 Not true.  See


1.  If you have not contacted your elected officials in Congress.  Please do so. See this pdf for suggested communication.

2.  If you have, call 202-224-3121, ask to speak to the office you contacted, then ask to speak to the staff person responsible for retirement savings policy and/or tax policy; when connected, refer to your communication, and ask politely if the [Senator] [Representative] has had time to review the issue you raised in your communication.  If so, has s/he contacted DOL, and if not, ask respectfully that she/he do so, noting you will “check” again in a week or so.

This ESOP community is threatened by the DOL proposal.  Since 1974, when threatened, the voice of ESOP advocates has consistently beaten back the threat 80% of the time.

Let’s keep this wining percentage!