Greatbanc Settlement Agreement

In addition, the NBL agreement has still not dispelled many of the ambiguities or uncertainties found in previous agreements. Given that there are now five separate agreements, it is necessary for the European Community as a whole to provide further clarification and/or guidance to the DOL, either in the form of regulations or by other means, so that the agreements are truly useful to the European Community as a whole. While some aspects of the previous DOL procedural agreements have provided useful perspectives to the regulated community with respect to the simplicity of transactions and documentary procedures for ESOP transactions, the ETF agreement does not add rational and constructive guidelines. The list of control factors presented in the ETF agreement is largely separated from the ordinary conceptions of corporate governance and shareholder rights, and the compensation provisions create an expensive, unnecessary and probably impossible framework for the implementation of legally accepted compensation agreements. As we have already seen, the terms of the various transaction agreements have been considered by some ESOP administrators as “good practices”. However, given that the material provisions of the NBL agreement are identical to the material terms of the GBTC agreement, it remains to be seen whether only the provisions of the GBTC agreement and the NBL agreement should be regarded as “good practices” and that the other provisions that may appear in one or more other agreements are indeed tangential or specific to the particular circumstances of any agent referred to in those agreements. In the summer of 2014, a public announcement was made regarding the resolution of certain ongoing disputes between the U.S. Department of Labor (“DOL”) and the GreatBanc Trust Company (“GBTC”). We felt that it would be useful for the ESOP community to summarize our current interpretation and reactions to the transaction agreement, as we plan to continue our collaboration as financial advisors to ESOP companies and ESOP administrators. This article deals with six important issues, but we recognize that there may be others. We are happy to discuss this with all interested parties.

THE current DOL program, which bypasses the processes established for the development of regulatory guidelines (which would require public publication and the possibility of opinion from the regulated community) and attempts to promote the behaviour of ESOP directors by publishing privately negotiated “process agreements,” continues to yield ambiguous, unexpected and often disturbing results. While some members of the ESOP community have viewed the various process agreements as “good practices” for ESOP administrators, in practice DOL often seems to view procedural agreements as assertions of legal requirements. Although considered only practical guides, the differences between the six agreements make it difficult for the Community to understand what THE FDrs consider to be “good practice”.

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