DOL obtains $866k judgment against bank ESOP fiduciaries — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

DOL obtains $866k judgment against bank ESOP fiduciaries

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in Compensation and Benefits,Human Resources

The U.S. Department of Labor Em­­ployee Benefit Security Administration has obtained a judgment against fiduciaries for the California Pacific Bank’s Employee Stock Ownership Plan after they failed to make employees whole following the plan’s dissolution.

The bank terminated the ESOP in 2010. The Employee Retirement Income Security Act required the fiduciaries to sell company stock and place the cash into individual employee retirement accounts. DOL investigators found that the fiduciaries—the bank’s chairman and several trustees—instead divided the stock and placed it in the employees’ accounts. Because the stock is not publicly traded, the plans would have had little opportunity to sell it.

The fiduciaries also diverted $81,407 of a plan account receivable into the bank, and transferred $69,745 from the plan’s account to the bank.

With interest the judgment totaled $866,840.

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