Daniel Aronowitz, President Trump’s nominee to lead the Employee Benefits Security Administration (EBSA) as Assistant Secretary of Labor, signaled a major shift in the Department of Labor’s posture toward Employee Stock Ownership Plans (ESOPs) during a Senate confirmation hearing in Washington D.C. today.
EBSA is the chief regulator of ESOPs at the DOL under the Employment Retirement Income Security Act (ERISA).
As reported in a press release today from the ESOP Association—the largest organization in the world supporting employee-owned companies, Aronowitz was asked about his stance on ESOPs by Senator Lisa Murkowski (R-AK) during the hearing of the Senate Health, Education, Labor & Pensions (HELP) Committee. Murkowski noted that ESOPs have been operating under a patchwork of litigation and investigation, and expressed concern that the department has taken excessive enforcement actions against ESOPs.
Aronowitz responded by saying he believes Congress wants to promote ESOPs and that everyone is for them except for the DOL for the last 20 years.
“I will end the war on ESOPs. I think it’s the best way for employees to get an additional benefit and ownership in an American company,” Aronowitz said. “The valuation companies have all been sued by the DOL…it can’t be right that every single one of them is doing it wrong. What the Department is doing is nitpicking the professional judgment of the valuation professionals. I’m going to put an end to that. Because I think unless there is a clear conflict of interest, then the valuation is appropriate when done by an independent valuation firm.”
Later in the hearing, Senator John Husted (R-OH) added his support for ESOPs, saying, “Mr. Aronowitz, you mentioned something in your testimony about ESOPs, that’s a great way to help businesses involve their employees and keep the legacy of those businesses in those communities. So I encourage you to do everything you can to support ESOPs in your role.”
Senator Bill Cassidy, M.D. (R-LA), chair of the Senate HELP Committee, delivered remarks during today’s hearing on all four Trump administration nominees at the Department of Education, the Department of Labor, and the Occupational Safety and Health Administration. Of Aronowitz, he had this to say:
“If confirmed, Mr. Aronowitz committed to improving health and retirement benefits for workers, including independent contractors. His decades of legal experience and knowledge of ERISA will be an asset to this mission.”
Cassidy in May introduced two bills that would further support ESOPs: the Employee Ownership Representation Act and the Employee Ownership Fairness Act.
“ESOPs put more money in Americans’ pockets and lead to a more productive workforce,” he said at the time. “By strengthening ESOPs, we strengthen workers and their ability to invest in their futures.”
The ESOP Association, representing businesses with an Employee Stock Ownership Plan (ESOP) and the 14 million Americans with an interest in an ESOP, said in the press release it strongly supports the confirmation of Aronowitz to lead EBSA.
“Daniel Aronowitz is uniquely qualified to address the challenges faced by ESOPs, workers, and potential ESOP founders under the current regulatory structure,” said James Bonham, President and CEO of The ESOP Association. “Today’s hearing was the clearest sign yet that the Trump Administration is serious about ending the decades of mistreatment of ESOPs and pursuing a regulatory agenda that will allow ESOPs to flourish. Mr. Aronowitz has overwhelming support among The ESOP Association’s members, and should be quickly confirmed.”
Nominee outlines priorities
Before answering questions, Aronowitz spoke broadly about his intentions in the EBSA role during his opening statement before the HELP Committee.
“First, I will improve EBSA’s enforcement of fiduciary law… EBSA’s enforcement will be fair, even-handed, and efficient.”
EBSA nominee Daniel Aronowitz
“First, I will improve EBSA’s enforcement of fiduciary law. We will end the practice of open-ended investigations that go on for years. We will end the bias against ESOPs and other legitimate ways to expand retirement benefits and ownership to America’s workers. And we will end the regulatory abuse of common-interest agreements with plaintiff lawyers. EBSA’s enforcement will be fair, even-handed, and efficient,” he said.
He plans to champion the cause of encouraging plan sponsors—“once we give them even-handed enforcement and regulatory clarity”—to expand retirement and health care benefits to America’s workers.
“But none of this will happen until we provide regulatory clarity and eliminate the ERISA litigation abuse that is turning benefit plans into liability traps,” Aronowitz said. “I also look forward to working with Congress for legislative changes needed to end litigation abuse, and to meet the challenges of the modern economy and workforce, including the coming wave of artificial intelligence and its impact on American workers.”
Aronowitz added that his experience has given him unique insights into how to better protect and expand the retirement and health security of American workers, and if confirmed he will “work hard every day to unleash and unlock the creativity and full potential of America’s employee benefit system. EBSA needs a major turnaround, and I am an experienced turn-around manager with unique fiduciary expertise and experience.”
SEE ALSO:
• Trump EBSA Nominee Aronowitz Calls for Specialized ERISA Court
• Trump EBSA Nominee Aronowitz a Stern Critic of Frivolous ERISA Litigation
• Sen. Cassidy Introduces Legislation Supporting ESOPs
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.