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The Employee Ownership Update

Loren Rodgers

November 1, 2013

(Loren Rodgers)

House Passes Bill to Block SEC and DOL Fiduciary Regulations

By a vote of 254-166, the House has passed a bill to block both the Securities and Exchange Commission and the Department of Labor from implementing new fiduciary rules for stockbrokers and other investment advisors. The SEC rules are being developed under the Dodd-Frank Act and are designed to ensure that brokers and certain other advisors are acting in their clients' interests, not their own. The DOL rules are not pursuant to any legislation but would require financial advisors to retirement plans to adhere to a much stricter set of fiduciary standards. The bill directs the SEC to conduct an additional study before issuing regulations and blocks the DOL from issuing its regulations until the SEC does.

The DOL regulations are of interest to the ESOP community because they would define appraisal firms for ESOPs as plan fiduciaries, raising concerns that some appraisers might stop doing ESOP work and those remaining would change more.

The bill attracted 30 Democratic votes, but has little if any chance on the Senate and, in any event, would be vetoed by the President.

IRS Releases New Dollar Limitations for Retirement Plans

The IRS announced on October 31, 2013, cost-of-living adjustments applicable to dollar limitations for pension plans and other items for 2014.

NCEO Launches the Retired ESOP Company Executive Directory

You can now learn about ESOPs, governance, and ownership management from leaders who created successful employee-owned companies. The NCEO's new Retired ESOP Company Executive Directory currently has 40-some people from around the United States in various industries, from manufacturing to consulting, and from retail to construction.

The directory includes former top executives of ESOP companies willing act as volunteer mentors on establishing plans and making them work well. Many also are interested in serving on ESOP boards, providing strategic advice, and/or volunteering for outreach programs. The directory has an exceptional group of knowledgeable people who are eager to help.

If you want to become a member of the directory yourself, you can go to this link or contact Corey Rosen at crosen@nceo.org.

Fiduciaries of California ESOP to Repay Plan Funds

The Department of Labor (DOL) has obtained a consent order for fiduciaries to repay funds to an ESOP. The order requires fiduciaries of the Parrot Cellular ESOP to pay $4,181,818 to the plan. The settlement resolves a lawsuit filed in April 2012 after an investigation by the DOL's Employee Benefits Security Administration (EBSA) found the fiduciaries violated the Employee Retirement Income Security Act (ERISA) by causing or permitting the ESOP to purchase Parrot Cellular stock for more than fair market value.

Companies Sought for Study on Ownership Behaviors

Brigham Young University's Entrepreneurship Center and the Ballard Center are seeking companies to participate in a new research project on intrapreneurship. The project's goal is to help organizations nurture intrapreneurial attitudes and actions by determining what challenges need to be overcome, which skills need to be gained, and how the organization must change.

The study will cover workforce readiness (barriers and drivers of individual intrapreneurship) and organizational readiness (systemic barriers and drivers of innovation). If enough employee-owned companies participate, the study may also differences in employee engagement between employee-owned companies and traditionally owned companies. To learn more about participating in this international research project, see IntrapreneurIndex.com.

We The Owners Makes Splash at Film Festivals

We the Owners, a documentary about employee ownership in the United States, has been officially selected to screen at the California Independent Film Festival next week, marking the seventh film festival for which it is a selection. In addition, the film was selected by the Academy of Management and the US Association of Small Business and Entrepreneurship.

Find screenings, sponsor your own screening, or purchase the film for your own use at www.wetheowners.com.

Nominations for the NCEO Board of Directors Now Open

Nominations for the 2014 election for the NCEO's board of directors open today, November 1, and will close on December 13, 2013. The election will take place in January 2014, and winning candidates will become directors at the annual meeting of the board of directors on April 7 and 8, 2014, in Atlanta.

Those interested in serving on the NCEO's board should familiarize themselves with the background information at the online resource Running for Election to the NCEO's Board of Directors.

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