The DOL Fiduciary Process Agreements for ESOP Transactions (digital)

From 2012 to 2014, GreatBanc Trust Company and the Department of Labor (DOL) negotiated an "Agreement Concerning Fiduciary Engagements and Process Requirements" that provides guidance for future ESOP transactions. Although the agreement formally applies only to GreatBanc, the DOL has stated that others would "do well to take notice of" the agreement's provisions. In the ensuing years, five other trustees have entered into fiduciary process agreements with the DOL. The most recent, entered into between the DOL and Farmers National Bank of Danville, contains provisions that are not in the GreatBanc agreement or the other process agreements; thus, it has created confusion and consternation among ESOP trustees, valuation advisors, and ESOP attorneys.

This publication, whose coauthor Ted Becker represented GreatBanc in the negotiations with the DOL that led to the GreatBanc Fiduciary Process Agreement, is intended to be a resource to those who seek to use the fiduciary process agreements as a guide to an ESOP trustee's obligations. It compares the provisions in the six fiduciary process agreements in detail, quoting and comparing the original language. It cites guidance (if any) relating to each provision, and comments on each provision in light of ERISA, its legislative history and other congressional materials, and other laws and regulations. Furthermore, the authors set forth information about ERISA's standards for ESOP trustee conduct and how those standards affect the interpretation of the fiduciary process agreements.