(Complete Show Notes Below)
In the 55th episode of the Financial Procast:
ESOPs Gone Wild
The DOL has filed a lawsuit against the California Pacific Bank. It seems that after the bank unwound their ESOP, they violated ERISA law by shortchanging the employees who were the plan participants.
First, we thought it appropriate to offer a high level overview of ESOPs just to make sure that we're all on the same page. ESOP is the acronym for employee stock ownership plan which is just another type defined contribution qualified retirement plan (think 401k, 403b, 457). The major difference being that they employee doesn’t actually contribute anything. All contributions are made on behalf of the employee and in the form of company stock.