On March 28, the Department of Labor sued Wilmington Trust N.A., alleging that it relied on a flawed valuation in a $46 million ESOP transaction involving Stargate Apparel Inc. and Rivstar Apparel Inc. The suit alleges that the appraisal firm had ties to the selling owner and that it was based on unrealistic projections. Wilmington Trust declined to comment, noting that the litigation is ongoing.

That suit follows on a March 21 ruling by the Fourth Circuit Court of Appeals that upheld a $29.8 million judgement against Wilmington Trust. The district court had ruled that an ESOP overpaid for stock in Constellis Group Inc., finding that in the $201.5 million transaction Wilmington had failed to ensure that its reliance on the valuation report was reasonably justified.

In a March 25 article in Bloomberg, Wilmington Fine Points to Lack of ESOP Guidance, Attorneys Say (subscription required), reporter Warren Rojas notes that "The guidelines for determining the fair market value of ESOP shares have been a work in progress since the tail end of the Reagan administration," and quotes numerous ESOP experts calling for final regulations.