Corey Rosen
ESOPs Added to IRS Volume Adopter Letter of Determination Program:
In Revenue Procedure 2021-4, the IRS added ESOPs to Form 5307, the form used to submit letter-of- determination requests.
Employee Ownership Legal Digest (16) Archive
Stay informed on the latest legal developments impacting employee ownership. This page provides timely and concise summaries of key cases and rulings, contributed by experienced attorneys, to help the entire employee ownership community understand their implications, and also offers access to NCEO's archive of prior content.
Corey Rosen
ESOP Company and Trustee Agree on Settlement in Valuation Case
In Walsh v. Reliance Trust et. Al., No. 17-CV-04540 (D.C. Minn. Jan. 5, 2022), Reliance Trust and the directors of Kurt Manufacturing agreed on a $9.4 million settlement in an ESOP valuation case. Reliance will pay $8.4 million to the company’s ESOP and the directors and officers of Kurt Manufacturing will pay $989,000.
Corey Rosen
DOL Investigation Results in Settlement with ESOP Company
Fiduciaries of the Mohawk Hospital Equipment Inc. ESOP will have to pay $431,000 over claims of excessive compensation paid to themselves and family members.
Corey Rosen
Release of Claims Not Enough to Dismiss Case
In Zavala v. Kruse- Western, Inc., No. 1:19-cv-00239- DAD-SKO (E.D. Cal., Dec. 13, 2021), a district court ruled that GreatBanc Trust and the board of Kruse-Western Inc. must defend themselves in a lawsuit over the 90% drop in stock price following a $244 million ESOP buyout.
Corey Rosen
Uncompleted ESOP Deal Results in Broker Dealer Rescission Claims
In GunBroker.com, LLC v. Tenor Capital Partners, LLC, no. 1:2020cv00613 (N.D. GA., Nov. 3, 2021), a Georgia court provided mixed rulings on whether Tenor Capital was required to be a registered investment advisor under the Federal Investment Advisors Act or Georgia state law.
Corey Rosen
Court Reduces Settlement in Sentry Equipment Case
In Walsh v. Vinoskey, No. 20-1252 (4th Cir., Dec. 7, 2021), the 4th Circuit reduced a $6.5 million settlement between Adam Vinoskey, the former owner of Sentry Equipment & Erectors Inc., and the Department of Labor, by $4.2 million.
Corey Rosen
ESOP Lawsuit Not Covered by Fiduciary Insurance
In Secretary of Labor v. Potts, 2021 No. 20-3856, (6th Cir., Nov. 24, 2021, unpublished) a circuit court ruled that a DOL lawsuit against an ESOP trustee in a valuation case is not covered by the company’s professional liability insurance policy because the policy expressly excluded ESOP issues from coverage.
Corey Rosen
Court Provides Mixed Ruling in Stock Distribution Case
In Horan et al v. Goal Structured Solutions, Inc. Employee Stock Ownership Plan et al, 3:20-cv-02290 (S.D., Calif. Nov. 2, 2021) a district court said that plaintiffs could proceed with a claim for equitable relief.
Corey Rosen
Aetna Prevails in Stock-Drop Lawsuit
In Radcliffe v. Aetna, Inc., No. 3:20-cv-01274, 2021 WL 4477408 (D. Conn. Sept. 30, 2021) a district court said that plaintiffs failed to state a claim concerning the continued holding of Aetna stock while the stock price was artificially inflated.
Corey Rosen
Second Circuit Affirms Lower Court Ruling that Officers and Trustees’ Action in Tribune Corporation’s ESOP LBO Were Not Fraudulent Conveyance
In In re Trib. Co. Fraudulent Conv. Litig., 10 F.4th 147 (2d Cir. 2021), reh’g en banc denied, No. 19-3049 (2d Cir. Oct. 7, 2021), the Second Circuit upheld lower court rulings that officers, board members, and various advisors (including GreatBanc as ESOP trustee and Duff & Phelps as a financial advisor) could not be sued by the bankruptcy trustee for fraudulent conveyance.