Please note: As of January 20, 2021, information in some news releases may be out of date or not reflect current policies.
U.S. Department of Labor Reaches Agreement to Restore $5.45 Million to Texas-Based Employee Stock Ownership Plan
LUBBOCK, TX – The U.S. Department of Labor has entered into an agreement with the fiduciaries of Cactus Feeders Inc. Employee Stock Ownership Plan (ESOP) who will repay $5.45 million in plan losses to the ESOP. The agreement resolves a March 10, 2016, civil suit brought by the Department alleging fiduciaries failed to fulfill their obligations under the Employee Retirement Income Security Act (ERISA) of 1974. The allegations stem from a December 2010 stock transaction that resulted in the ESOP overpaying for the outstanding shares of the company.
Lubbock National Bank, the ESOP's trustee, has also agreed to take steps that will ensure it fulfills its fiduciary obligations in the future. These include agreeing to an extensive list of actions and conduct that prudent fiduciaries undertake when evaluating whether, for what value, and under what conditions an ESOP should purchase employer stock. The express terms are found in the comprehensive settlement agreement approved by the court on June 15, 2018.
"ESOP fiduciaries must only act in the interests of the plan's participants and beneficiaries," said Deborah Perry, Employee Benefits Security Administration Regional Director in Dallas. "The U.S. Department of Labor will take all actions necessary to ensure that fiduciaries live up to their legal obligations."
Employers and workers can reach EBSA toll-free at 866-444-3272 for help with problems related to private sector retirement and health plans. Additional information can be found at https://www.dol.gov/ebsa.
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Acosta v. Cactus Feeders, Inc et al
Civil Action No. 2:16-cv-00049-J