Following a Department of Labor (DOL) lawsuit, First Bankers Trust’s Board of Directors decided to suspend the engagement of its services for transactions related to new employee stock ownership plans (ESOPs).
In a letter obtained by PLANSPONSOR, the president of the company said, “These are certainly unsettling times for ESOP fiduciaries and the community as a whole.”
According to the letter, First Bankers will continue to provide its services to its existing ESOP clients, including serving as ESOP trustee for transactional matters. In addition, First Bankers will continue to pursue and accept successor trustee relationships with ESOP companies that are not currently clients.
“We believe that this change will allow First Bankers to focus more of its resources on its existing clients and their needs, while enabling us to provide the highest quality fiduciary services available,” the letter says.In April, a federal judge, presiding over the DOL lawsuit found that First Bankers Trust Services Inc. breached its duties of prudence and loyalty to the participants of an ESOP when it caused the plan to overpay for shares of the company’s stock. U.S. District Judge Michael A. Shipp of the U.D. District Court for the District of New Jersey awarded to the plan $9,485,000 (plus interest), subject to the reduction in a 2016 consent order against the plan sponsor’s CEO.