From: Rich Gogg [mailto:RichG@mylsb.com] 

Sent: Friday, February 04, 2011 11:39 AM 

To: EBSA, E-ORI - EBSA 

Subject: Definition of Fiduciary Proposed Rule

To Whom It May Concern: 

Lincoln Savings Bank (LSB) sponsors an employee stock ownership plan, or ESOP. Our ESOP makes 

employees of LSB beneficial owners of our stock. 

Federal law requires that every year, as a privately-held company, not traded on a public stock 

exchange, that LSB pays to have a qualified, independent valuation establish the value of 

the employees’ shares in the ESOP. 

I have learned that on October 22, 2010, the Department of Labor issued a proposed regulation to 

reverse a 34-year old policy, honored by both Republican and Democratic Administrations that would 

automatically make any valuator of ESOP shares a fiduciary to our ESOP. (Current law clearly makes the 

trustee a fiduciary and company personnel with powers over the ESOP fiduciaries.) 

This proposal will significantly increase the cost of establishing and maintaining an ESOP. 

If the valuation provider is a fiduciary, he or she will have to purchase fiduciary insurance; many will 

withdraw providing valuation services to an ESOP company like LSB and be subject to 

aggressive, needless lawsuits. 

In addition, if the DOL proposal is finalized, it would create a contradiction. Internal Revenue Code 

§401(a)(28)(c) mandates the appraiser of private company ESOP stock be independent. If a valuator 

becomes a fiduciary to the ESOP, he or she would not be independent. 

However, I do not write to protect the valuation profession; I write to protect our ESOP, and our employee 

owners. 

If the DOL proposal becomes effective, it would diminish our profits, which means lower share 

value for employee owners, and thus less retirement savings. It would hinder any plans for expansion, stop 

the company from acquiring another company, and would increase the cost of transactions for the 

company. 

The biggest concern is the way the proposal is written, and its impact makes all private ESOP 

companies, both our trustees and company fiduciaries sitting ducks for lawsuits. Candidly, the proposal 

will cause a reassessment of whether successful ESOP programs should 

continue. 

The DOL proposal is contrary to the law, which says Federal agencies are not to hinder the creation and 

operation of ESOPs. (See enclosure) 

I respectfully ask that you relay our concerns to the DOL. 

I also respectfully ask that you consider expressing opposition and/or doubts about the DOL 

attack on private company ESOPs. 

Sincerely, 
Rich J. Gogg 

Lincoln Savings Bank 

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