What happens if ERISA requirements are violated?
ERISA provides participants in all qualified plans with legal rights, and imposes penalties on fiduciaries who violate those rights. In addition, ESOPs are subject to the prohibited transactions rules of ERISA and the Code. The prohibited transactions rules require that purchases and sales of company stock which violate the law must be reversed, and impose severe financial penalties on persons connected with the company or the ESOP who participate in a prohibited transaction. The risks of a fiduciary violation are reduced if the ESOP engages experienced, competent ESOP advisors, and the ESOP fiduciaries exercise their best independent judgment after reviewing all aspects of the transaction and fully informing themselves of the alternatives. Return to the top of the page.
