From: LawMemo Employment Law Blog
The US Department of Labor has sued the trustees of the employee
stock ownership plans and a number of ERISA plans of DirecTECH
Holding Co, its former subsidiaries, the companies' boards of
directors, and the parties who sold stock at inflated prices to the
plans for alleged violations of the Employee Retirement Income
Security Act (ERISA). DOL alleges that the defendants
imprudently used the plans' assets to purchase company stock in
seven separate transactions at inflated prices that caused millions
of dollars of losses to the plans and their participants while
enriching those defendants who sold the stock to the
plans. [Press release]
Respond to this topic on your own blog
Click and press Ctrl+C to copy and paste this discussion on your blog or site
Related Articles
Henry v. U.S. Trust Co.
U.S. 2d Cir., ERISA, Labor amp Employment Law, Securities Law In an
ERISA action challenging a stock purchase under an Employee Stock
Ownership Plan ESOP, the dismissal of the complaint is reversed
where, when an ESOP incurs debt to finance a purchase of shares of
stock and then later sells the shares in exchange for cancellation
of some of that debt, the debt cancellation in the second
transaction should not be construed as having reduced the purchase
price paid in the first transaction.
Special Reporting Requirements Regarding Incentive Stock Options and Employee Stock Purchase Plans -- Final Regulations Issued Under Section 6039
Section 6039 of the Internal Revenue Code of 1986, as amended (the
"Code"), imposes reporting requirements on corporations with
respect to the exercise of incentive stock options and the transfer
of stock acquired under employee stock purchase plans.
IRS Issues Final Regulations for Employee Stock Purchase Plans.
An employee stock purchase plan ("ESPP") allows employees of
corporations (typically publicly traded companies) to purchase
company stock or stock of an affiliate at a discount with the
potential for favorable tax treatment under Section 423 of the
Internal Revenue Code ("Section 423") if certain conditions are
met. Under an ESPP, eligible employees receive options to purchase
company stock (usually at a discount) pursuant to an "offering."
Employees typically participate in an ESPP by authorizing voluntary
payroll deductions during an "offering period."
Director and Officer Liability under ERISA Law
Under ERISA, ''employers'' must make all necessary contributions to
multi-employer pension plans pursuant to the plans' terms or the
terms of a collective bargaining agreement. Every employee benefit
plan must have a funding procedure and fully explain how and under
what circumstances payments are to be made to the plan. If these
responsibilities are not [...]
IRS To Focus on Qualified Retirement Plan Failures.
Qualified retirement plans are generally exempt from federal income
tax, but nevertheless must comply with reporting and other
requirements related to how they are administered. Further, as with
individuals and entities subject to federal tax laws, qualified
retirement plans are vulnerable to audits by the IRS. On its
website, www.irs.govretirement, the IRS has clearly stated its
intention to conduct audits this year to analyze operational
features of retirement plans. According to Monika Templeman, the
Director of Employee Plans Examinations, quotThere will be a
prominent employee benefit examination presence in the Retirement
Plans Community of benefits practitioners, plan sponsorsemployers,
and plan participantsemployees.quot She states further that the IRS
will increase its focus on en...
