U.S. reconsiders ESOP regulation

The U.S. Department of Labor is reconsidering a proposed rule that critics said would have been hurt employee stock ownership plans.According to U.S. Sen. Kelly Ayotte, R-N.H., the department announced last week it is reconsidering the rule, which she said would have imposed unnecessary fiduciary requirements on ESOPs.The regulation, as originally proposed, would have expanded the definition of “fiduciary” under the Employee Retirement Income Security Act, or ERISA, to include appraisers of all private ESOPs.Ayotte said it would result in new compliance and regulatory costs for private companies that offer ESOPs and could jeopardize the availability of the plans in the future.She said the original version of the rule also would force appraisers to purchase expensive fiduciary insurance, employ specialized counsel, and could expose private ESOP companies to frivolous litigation. Ayotte introduced legislation in June aimed at reversing the department’s rule by explicitly exempting ESOP appraisals from the law’s fiduciary requirements.Last week, the department announced it will re-propose its rule on the definition of a fiduciary. The new rule is expected to be issued in early 2012. — JEFF FEINGOLD/NEW HAMPSHIRE REVIEW