The U.S. Department of Labor (DOL) takes a hard look at Employee Stock Ownership Plans (ESOPs), placing an investigative emphasis on whether plan sponsors are correctly valuing their stock.

Fox Rothschild’s national ESOP Litigation Team possesses the insider knowledge that plan sponsors, boards of directors and fiduciaries need should an investigation occur. With the insight of a former DOL investigator, the team knows both what the government looks for during a probe. But more importantly, the team possesses the knowledge and connections to quickly resolve matters when they arise in the most confidential and cost-effective manner possible.

“Standard approach” is not part of our vocabulary. From offices across the country, including in New York, Pennsylvania, New Jersey, Illinois and California, our ESOP Litigation Team provides plan sponsors custom solutions that facilitate ERISA compliance while also keeping in mind their business objectives and corporate culture. We help clients communicate effectively with their workforce, understand their insurance coverage options and develop strong risk mitigation plans.

In addition to Employee Benefits Security Administration (EBSA) investigations, our team also is skilled with actions taken by the Office of the Solicitor of the United States Department of Labor (DOL), the Internal Revenue Service (IRS) and the Pension Benefit Guaranty Corporation (PBGC). And when litigation arises, we vigorously defend our clients against class action lawsuits involving ESOPs, breach of fiduciary duty and prohibited transaction claims, and other participant claims.

The team often handles:

• DOL audits and investigations of retirement and health plans, insurers and other ERISA-related issues
• ESOP fiduciary and prohibited transaction litigation involving valuation disputes, questions of fiduciary prudence, ESOP transactions and plan operations
• Discovery and other disputes involving service providers, including auditors, valuation advisers, non-fiduciary recordkeepers, legal advisers and third-party administrators
• IRS audits involving retirement plans, and related excise tax and plan disqualification issues
• PBGC claims against financially distressed employers and post-termination audits.

Representative Matters

• Provided advice to international manufacturing company on ERISA pre-litigation matter involving certain distributions made under an employee stock ownership plan (ESOP) that were subject to special rules under ERISA and the Internal Revenue Code. Participants sought $1 million in damages, but a favorable resolution was reached before a complaint was filed.
• Represented an international manufacturing company in connection with a DOL investigation into a defined benefits plans with more than $1 billion in assets. The DOL has issuing subpoenas for documents from the company and service providers, but so far held off on further proceedings.
• Represented major corporate ESOP trustee in connection with DOL litigation where DOL claimed that the trustee paid in excess of fair market value.