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Daniel Aronowitz: I Will End the War on ESOPs

via Business Wire

President Trump’s Nominee for Assistant Secretary of Labor and Head of EBSA Signals Major Shift in Dep. Of Labor’s Posture Toward ESOPs During Confirmation Hearing

During his confirmation hearing today, Daniel Aronowitz, President Trump’s nominee to lead the Employee Benefits Security Administration (EBSA) as Assistant Secretary of Labor, signaled a sea change in how the Department of Labor (DOL) views ESOPs under this Administration. EBSA is the chief regulator of ESOPs at the DOL under the Employment Retirement Income Security Act (ERISA).

During the hearing at the Senate Health, Education, Labor & Pensions (HELP) Committee, Aronowitz had the following exchange with Senator Lisa Murkowski (AK):

SENATOR MURKOWSKI: “You're probably very familiar with the angst expressed by some about the need for a single clear regulatory definition of good faith effort for valuing ESOP stock. The concern is that, instead of having a clear definition that is spelled out in regulation, ESOPs have been operating under a patchwork of litigation and investigation. There is also some concern that the department has taken excessive enforcement actions against ESOPs. Can you speak briefly to your views on these?"

DANIEL ARONOWITZ: "I believe that Congress wants ESOPs and everybody is for ESOPs except for the DOL for the last 20 years. I will end the war on ESOPs. I think it's the best way for employees to get an additional benefit and ownership in an American company. The valuation companies have all been sued by the DOL...it can't be right that every single one of them is doing it wrong. What the Department is doing is nitpicking the professional judgment of the valuation professionals. I'm going to put an end to that. Because I think unless there is a clear conflict of interest, then the valuation is appropriate when done by an independent valuation firm."

In addition, Senator John Husted (OH) added his support for ESOPs during the hearing, saying “Mr. Aronowitz...you mentioned something in your testimony about ESOPs, that's a great way to help businesses involve their employees and keep the legacy of those businesses in those communities. So I encourage you to do everything you can to support ESOPs in your role."

The ESOP Association, the leading organization representing businesses with an Employee Stock Ownership Plan (ESOP) and the 14 million Americans with an interest in an ESOP, strongly supports the confirmation of Daniel Aronowitz.

“Daniel Aronowitz is uniquely qualified to address the challenges faced by ESOPs, workers, and potential ESOP founders under the current regulatory structure,” said James Bonham, President and CEO of The ESOP Association. “Today’s hearing was the clearest sign yet that the Trump Administration is serious about ending the decades of mistreatment of ESOPs and pursuing a regulatory agenda that will allow ESOPs to flourish. Mr. Aronowitz has overwhelming support among The ESOP Association’s members, and should be quickly confirmed.”

Before answering questions, in his opening statement submitted to the Committee Aronowitz was clear about his intent toward ESOPs: “First, I will improve EBSA’s enforcement of fiduciary law. We will end the practice of open-ended investigations that go on for years. We will end the bias against ESOPs and other legitimate ways to expand retirement benefits and ownership to America’s workers. And we will end the regulatory abuse of common-interest agreements with plaintiff lawyers. EBSA’s enforcement will be fair, even-handed, and efficient.”

Aronowitz said his experience “has given me unique insights into how to better protect and expand the retirement and health security of American workers,” and if confirmed he will “work hard every day to unleash and unlock the creativity and full potential of America’s employee benefit system.”

“Daniel Aronowitz should be quickly confirmed so he and Secretary Chavez DeRemer can begin the process of driving the necessary changes at EBSA and fulfill the true promise of ESOPs for American workers and our economy,” Bonham added. “We thank Chairman Cassidy for his leadership in this process, and hope for a speedy vote in Committee so the full Senate can proceed to Mr. Aronowitz’s confirmation.”

About The ESOP Association

The ESOP Association is the largest organization in the world supporting employee-owned companies, the more than 10 million U.S. employees who participate in an ESOP, and the professionals who provide services to them. Headquartered at the International Employee Ownership Center in Washington, DC and operating as a 501(c)6 organization with the affiliated Employee Ownership Foundation, The ESOP Association conducts and funds academic research, provides more than 160 annual conferences and events attended by nearly 15,000 individuals, and advocates on behalf of employee owners and their businesses to federal and state lawmakers.

"I will end the war on ESOPs. I think it's the best way for employees to get an additional benefit and ownership in an American company." Daniel Aronowitz

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