The U.S. Department of Labor has reached a $6.3 million settlement with a Maine-based welding supply company over violations to the Employee Retirement Income Security Act.
In a Dec. 19 news release, the department announced it had reached a settlement agreement with employee stock ownership plan fiduciaries of Maine Oxy-Acetylene Supply Co., based in Auburn, Maine. The settlement resolves a lawsuit on behalf of 100 workers, who alleged they had been forced to relinquish stock in the company at a steep discount, as well as Maine Oxy's alleged violations of the Employee Retirement Income Security Act.
"Fiduciaries must act solely for the benefit of the plan participants, not themselves," Employee Benefits Security Administration regional director Carol Hamilton said in the news release.
Labor Department Employee Benefits Security Administration regional director Carol Hamilton
| dol.gov/
The settlement stems from two lawsuits, one filed by in 2020 against Maine Oxy President and CEO Daniel Guerin, director Bryan Gentry and the employee stock ownership plan's trustee Carl Paine, the release reported. The lawsuit alleged the defendants breached their fiduciary duties when company shares were bought back for less than fair market value following the plan's termination in 2013.
"Our investigation alleges that Maine Oxy and Daniel Guerin imposed a non-disclosure agreement on a valuation company to hide relevant information about the value of the employee stock purchase plan from the trustee," Hamilton said in the release. "These actions shortchanged the plan participants and violated the Employee Retirement Income Security Act."
In April 2022, DOL's lawsuit was consolidated with a 2019 class action filed by plan participants, according to the release.
Other caretakers of similar stock plans thinking about doing what defendants in the Maine-Oxy case allegedly did should think again, regional solicitor of labor Maia Fisher said in the news release.
"The outcome of this case sends a clear message to all employee stock ownership plan sponsors, fiduciaries, lawyers, lobbying groups and the public that the U.S. Department of Labor will not tolerate financial gamesmanship in ESOP valuations," Fisher said in the release. "Fiduciaries who attempt to benefit or enrich themselves at the expense of plan participants will face active litigation and costly consequences for their behavior."
