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Washington, DC– Congressmen Guthrie and Loebsack introduced H.R. 2041 today, which would block a Department of Labor proposal to expand the definition of “fiduciary” under the Employee Retirement Income Security Act to include appraisers of Employee Stock Ownership Plans (ESOP).

“ESOPs have been recognized by Republican and Democratic administrations alike as an effective way for employees to save for retirement and share in their company’s success,” said Congressman Guthrie.  “It’s important that Congress sends a strong message to the Department of Labor that this financial instrument that was supported by presidents as diverse as Jimmy Carter and George W. Bush is not broken.  This proposed rule is a solution in search of a problem.”

“ESOPs are an important retirement saving tool for many Americans, and allow employees to own stock and build savings in a way that is rewarding for all parties involved,” said Congressman Loebsack.  “Classifying appraisers of ESOPs as fiduciaries would be unnecessarily burdensome and would reduce the level of retirement savings available to employees.  I look forward to working with Representative Guthrie to pass this important legislation.” 

Under current law, the trustees of private ESOPs are already liable as fiduciaries. Extending this liability to appraisers would, in the best-case scenario, drive-up costs for ESOP plans and have the net effect of moving stock gains away from the workers who earned them. In the worst-case scenario, this new and costly regulation would drive appraisers out of the market entirely or discourage companies from establishing an ESOP profit-sharing program.  The DoL proposal is also in conflict with current law which requires that appraisers of ESOP stock be “independent.”  An appraiser can’t be both independent and a fiduciary at the same time. 

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