California District Court Holds ESOP Fiduciaries Liable for Misadministration of Plan Termination

The District Court of Northern California ruled on October 24 that the fiduciaries of the California Pacific Bank were personally liable for $875,000 resulting from their failure to follow plan documents during the termination of the ESOP in 2011. The plan required distribution of accounts in cash, but the bank made the distributions in shares of company stock. An article in Bloomberg BNA quotes Rebecca Miller at RSM US LLP: "The lessons learned from this are simple—read your plan, follow its terms, keep accurate financial records, properly segregate plan assets from plan sponsor assets and when confronted with an unusual transaction, such as a plan termination, read everything again and seek experienced assistance."