It is said that bad news seems to come in threes. For those of us who work with Employee Stock Ownership Plans, that certainly felt true in June.
On June 3, the Department of Labor reached a $5.25 million settlement with Greatbanc Trust over allegations that ERISA was violated in an ESOP transaction. This was followed by a June 22 Wall Street Journal article that was critical of ESOPs. Finally, on June 25, the U.S. Supreme Court unanimously rejected a special presumption of prudence for ESOP fiduciaries in Fifth Third Bancorp v. Dudenhoeffer.
Does this mean you should steer clear of ESOPs for your clients? Absolutely not! ESOPs continue to be an attractive option for business owners looking to sell all or a portion of their company as part of their overall financial plan.
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