Full opinion text
OPINION LAWRENCE P. ZATKOFF, Chief District Judge. Plaintiff Appellee Elaine L. Chao, Secretary of the United States Department of Labor, brought this action against Defendants Appellants, Hall Holding Company, Inc., David L. Goldman, Kathleen A. Keat-ing, George A. Ahearn, Michael F. Shields, and Goldman Financial Group, Inc. In her complaint, the Secretary alleged that various components of an employee stock ownership plan (hereinafter “ESOP”) for the benefit of employees of a subsidiary of Hall Holding Company violated the Employee Retirement Income Security Act (hereinafter “ERISA”), 29 U.S.C. § 1001, et seq. Specifically, the Secretary alleged that defendants breached their fiduciary duties by purchasing stock on the ESOP’s behalf without adequate investigation and by overpaying for the stock. The district court agreed with the Secretary’s position, and granted her motion for summary judgment, finding inter alia: (1) defendants, as fiduciaries, failed to conduct a prudent and independent investigation to determine the fair market value of the stock; (2) a showing of harm or loss is not an element of a claim under 29 U.S.C. § 1106(a)(1); and (3) defendants owed the employee stock ownership plan $1,049,549.00, plus interest, which represented the difference between the amount originally paid for the stock and the fair market value of the stock as determined by the district court. For the reasons that follow, we AFFIRM the judgment of the district court. I. BACKGROUND A. Substantive Facts Prior to 1986, defendant Goldman Financial Group, Inc. (hereinafter “defendant GFGI”) was a broker that would help business entities buy and sell other businesses. However, in 1986, defendant GFGI began purchasing and holding companies for its own account. As alleged in the Secretary’s complaint, the owners of defendant GFGI are David L. Goldman (hereinafter “defendant Goldman”) and a trust benefit-ting defendant Goldman’s children. In the summer of 1988, defendant GFGI purchased Hall Chemical Company (hereinafter “Hall Chemical”) through Hall Holding Company (hereinafter “Hall Holding”) for approximately $21 million. Hall Holding is a subsidiary of defendant GFGI and a holding company whose primary asset is Hall Chemical. Defendant Goldman was the sole director of Hall Holding. The president of Hall Chemical was George A. Ahearn (hereinafter “defendant Ahearn”) and its Vice-President of Finance and Chief Financial Officer was Michael F. Shields (hereinafter “defendant Shields”). Defendant Ahearn and defendant Shields were also the trustees of the Hall Chemical employee stock ownership plan (hereinafter “Hall Chemical ESOP”). After the acquisition of Hall Chemical, Hall Holding owned 95% of Hall Chemical, and defendant Ahearn had the right to acquire the remaining 5%. The final defendant is Kathleen A. Keat-ing (hereinafter “defendant Keating”), the Director of Human Resources for defendant GFGI. After the purchase of Hall Chemical, defendant Keating was tasked with analyzing its compensation programs. As a result of her analysis and a meeting with a benefits consulting firm, defendant Keating made a number of recommendations, including the establishment of the Hall Chemical ESOP. Although defendant Goldman did not want to sell any stock, he was eventually persuaded that creation of the Hall Chemical ESOP was a good idea. In order to set up the Hall Chemical ESOP, defendant Keating retained attorney James Shumaker of Choate, Hall & Stewart in Boston, Massachusetts, whom she described as “very well regarded in the Boston area as sort of a senior ERISA specialist.” Throughout the summer of 1990, defendant Keating and Shu-maker spoke on a daily basis about the Hall Chemical ESOP. Shumaker advised defendant Keating that an independent appraisal should be completed by a qualified independent appraiser. Consequently, defendant Keating contacted James Cunningham about the appraisal. Although defendant Ahearn referred to Cunningham as “probably the premiere of analysts, Wall Street analyst of specialty chemical companies,” Cunningham had never “perform[ed] a valuation with regard to a subject company where an ESOP was purchasing an interest.” By way of background, Cunningham was employed by The First Boston Corporation. During his employ, he was asked to value defendant GFGI and its various properties, which included Hall Chemical. This was several months prior to the formation of the Hall Chemical ESOP. Cunningham completed this valuation in the spring of 1990. Soon after completing his valuation, Cunningham left The First Boston Company. After leaving, he was again contacted by defendant GFGI about completing a second valuation of Hall Chemical. Cunningham stated that he would complete a second valuation, but that his main priority was to find a job. Cunningham also explained that he would not be willing to inflate his first valuation of Hall Chemical. Finally, Cunningham said that he would consider any new information, but that he did not expect that this would “materially change” the prior valuation. These terms were acceptable to defendant GFGI. In completing the second valuation, Cunningham explained that he performed a valuation of 100% of Hall Chemical. Although someone may have mentioned something about an ESOP, Cunningham stated that his only job was to value Hall Chemical. Further, Cunningham stated that if he had been asked to determine “how much an ESOP should pay for stock in a company,” his valuation would have been different. In any event, Cunningham completed his second valuation of Hall Chemical in August 1990. His valuation determined that Hall Chemical was worth between $32.4 and $37.4 million, exclusive of debt, which the district court noted was consistent with his first valuation. See Reich v. Hall Holding Co., Inc., 990 F.Supp. 955, 958 (N.D.Ohio 1998). Upon receiving Cunningham’s second valuation, defendant Keating distributed it to several people, including defendant Ah-earn, defendant Shields, Shumaker, and other people at defendant GFGI, whom defendant Keating believed to include defendant Goldman. After some discussion with Shumaker, changes were made to the valuation so that it would comply with proposed regulations concerning stock purchases by ESOPs. A finalized version of Cunningham’s report was signed and dated September 5,1990. At this point, defendant Keating was left to determine a price to pay for the shares to be purchased by the Hall Chemical ESOP. During her deposition, defendant Keating explained how the eventual purchase price of $3.5 million was determined. First, the numbers of the valuation range, $32.4 and $37.4 million, were added and then divided by two. The resultant figure, $34.9 million, was multiplied by the amount of stock to be purchased, which defendant Keating erroneously said was 9.9%. The product of these two numbers was $3.4551 million. However, instead of using $3.4551 million as the purchase price, it was determined to be $3.5 million. Defendant Keat-ing explained: Given these values, I would do exactly the same number today, which is almost directly in the middle except it’s a round number, so for purposes of communication, purposes of the documentation, it just would work better at 3.5 million than 3.[4551], which is, after all, you know, you know, .1 percent of the transaction or something that we’re talking about here. When asked who was involved in determining the $3.5 million figure, defendant Keat-ing responded that defendant Goldman and another person at defendant GFGI would have been involved. Defendant Keating was then specifically asked what defendant Goldman’s involvement was in the determination of the $3.5 million figure, to which she responded: “He had to be willing to sell the stock at a price.” After the $3.5 million figure was decided upon, it was taken to defendant Goldman for his approval, which was given. The next step was to prepare the Hall Chemical ESOP documents, which were entitled The Hall Chemical Company Employee Stock Participation Plan. Once prepared, these documents provided that Hall Holding was the administrator and named fiduciary. As the sole member of Hall Holding’s Board of Directors, defendant Goldman had the authority to appoint individuals to administer the Hall Chemical ESOP and to appoint trustees to invest plan assets. In this capacity, defendant Goldman appointed defendant Ahearn and defendant Shields as members of the committee which served as administrator of the Hall Chemical ESOP for purposes of ERISA. Further, defendant Ahearn and defendant Shields were appointed trustees of the Hall Chemical ESOP. In this capacity, they secured a loan in the amount of $3.5 million from a Master Trust sponsored by defendant GFGI. The loan amount was used to purchase 9.96% of the stock in Hall Holding, not Hall Chemical, the company valued by Cunningham. On September 21, 1990, defendant Ah-earn and defendant Shields offered to purchase, for the Hall Chemical ESOP, 110 shares, or 9.96%, of Hall Holding stock for $3.5 million. Defendant Goldman accepted the offer, and 110 shares of Hall Holding, not Hall Chemical, were sold to the Hall Chemical ESOP. B. Procedural History On January 9, 1998, the United States District Court for the Northern District of Ohio ruled on the Secretary’s motion for partial summary judgment and on defendants’ motion for summary judgment and partial summary judgment. In denying both motions, the district court found: (1) defendants’ actions were fiduciary decisions subject to ERISA, not sponsor/corporate decisions; (2) defendants’ contributions to the Hall Chemical ESOP were not gifts; (3) “defendants, as the [Hall Chemical] ESOPs fiduciaries, did not conduct a prudent and independent investigation to determine the fair market value of the stock purchased by the [Hall Chemical] ESOP”; and (4) there was a genuine issue of material fact as to whether a reasonable fiduciary would have relied upon Cunningham’s valuation in determining the $3.5 million purchase price for the 110 shares of Hall Chemical. Hall Holding, 990 F.Supp. at 960, 961, 964, 965. On March 10, 1998, upon the Secretary’s motion for reconsideration, the district court held that “given the factual findings made by this Court in its [January 9, 1998] order, the Secretary is entitled to summary judgment as a matter of law on her claims under ERISA § 406(a)(1)(A) and (D), 29 U.S.C. § 1106(a)(1)(A) and (D).” Id. at 965. Specifically, the district court held that no loss needed to be shown in order to establish a violation of these sections of ERISA; failure to conduct a prudent and independent investigation was enough to establish a violation of § 406(a)(1)(A) and (D). Id. at 967. The district court referred the matter to a magistrate judge for a determination of the fair market value of the 110 shares of Hall Holding stock. On December 23, 1998, the magistrate judge issued a report and recommendation after considering the testimony of eight witnesses. The magistrate judge concluded that as of September 28, 1990, the fair market value of the Hall Holding stock was $2,731,174.75. On August 10, 1999, the district court accepted the magistrate judge’s analysis of the parties expert testimony but rejected his final valuation. Consequently, the district court held that the fair market value of 9.96% of Hall Holding stock on September 28, 1990 was $2,450,451.00. This resulted in damages to the Hall Chemical ESOP of $1,049,549.00, which represented the difference between the amount paid by the Hall Chemical ESOP for the Hall Holding stock and the fair market value of the stock as determined by the district court. See Reich v. Hall Holding Co., Inc., 60 F.Supp.2d 755, 759, 765 (N.D.Ohio 1999). On September 28, 1999, the district court, on a motion for reconsideration filed by the Secretary, found that the Hall Chemical ESOP was entitled to $1,188,457.70 in prejudgment interest, which, when added to the initial award of $1,049,549, equaled a total award of $2,238,006.70. Finally, on December 20, 1999, the district court issued an order detailing the method in which the $2,238,006.70 award was to be allocated. Specifically, the allocation was to be based upon the amount of stock that a given participant had received or would receive in the future. As a result of the proceedings before the district court, defendants filed two notices of appeal in this matter. The first notice of appeal was filed on September 9, 1999 and appealed the district court’s orders of January 9, 1998, March 10, 1998, and August 10, 1999. The second notice of appeal was filed by defendants on November 23, 1999. This notice appealed the same orders in the first notice of appeal, in addition to the district court’s order of September 28,1999. II. STANDARD OF REVIEW The Court reviews a district court’s decision on a motion for summary judgment de novo, using the same legal standards employed by the district court. See Henderson v. Ardco, Inc., 247 F.3d 645, 649 (6th Cir.2001). Summary judgment is appropriate only if the answers to interrogatories, depositions, admissions, and pleadings combined with the affidavits in support show that no genuine issue as to any material fact remains and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). A genuine issue of material fact exists when there is “sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citations omitted). In application of this summary judgment standard, the Court must view all materials supplied, including all pleadings, in the light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). “If the evidence is merely colorable or is not significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505 (citations omitted). The moving party bears the initial responsibility of informing the Court of the basis for its motion and identifying those portions of the record that establish the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met its burden, the nonmoving party must go beyond the pleadings and come forward with specific facts to demonstrate that there is a genuine issue for trial. See Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324, 106 S.Ct. 2548. The nonmoving party must do more than show that there is some metaphysical doubt as to the material facts. See Matsushita, 475 U.S. at 586, 106 S.Ct. 1348. It must present significant probative evidence in support of its opposition to the motion for summary judgment in order to defeat the motion for summary judgment. See Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505. III. LEGAL STANDARDS A. The ERISA Framework Under ERISA § 406(a), 29 U.S.C. § 1106(a), certain types of transactions between a plan and a party in interest are prohibited. A party in interest is broadly defined to include any fiduciary, a person providing services to the plan, an employer whose employees are covered by the plan, and certain shareholders and relatives. See § 3(14)(A)-(F), 29 U.S.C. § 1002(14)(A)-(F). The prohibited transactions between a plan and a party in interest, as set forth in § 406(a), are as follows: Except as provided in section 1108 of this title: (1) A fiduciary with respect to a plan shall not cause the plan to engage in a transaction, if he knows or should know that such transaction constitutes a direct or indirect- (A) sale or exchange, or leasing, of any property between the plan and a party in interest; (B) lending of money or other extension of credit between the plan and a party in interest; (C) furnishing of goods, services, or facilities between the plan and a party in interest; (D) transfer to, or use by or for the benefit of, a party in interest, of any assets of the plan; or (E) acquisition, on behalf of the plan, of any employer security or employer real property in violation of section 1107(a) of this title. 29 U.S.C. § 1106(a). The purpose of § 406(a) is “to prohibit transactions that would clearly injure the plan.” Jordan v. Michigan Conf. of Teamsters Welfare Fund, 207 F.3d 854, 858 (6th Cir.) (citing Lockheed Corp. v. Spink, 517 U.S. 882, 888, 116 S.Ct. 1783, 135 L.Ed.2d 153 (1996)). “Congress adopted § 406 to prevent employee benefit plans from engaging in transactions that would benefit parties in interest at the expense of plan participants and their beneficiaries.” Id. (citing Lockheed Corp., 517 U.S. at 888, 116 S.Ct. 1783). Although § 406(a) prohibits transactions between an interested party and a plan, there are exceptions to this rule. Under § 408(e)(1) of ERISA, § 406 does not apply to the acquisition or sale by a plan of the employer’s securities as long as the acquisition or sale is for “adequate consideration.” 29 U.S.C. § 1108(e)(1). The term “adequate consideration” is defined as follows: [I]n the case of an asset other than a security for which there is a generally recognized market the fair market value of the asset as determined in good faith by the trustee or named fiduciary pursuant to the terms of the plan and in accordance with regulations promulgated by the Secretary. 29 U.S.C. § 1002(18)(B); see also Herman v. Mercantile Bank, N.A., 143 F.3d 419, 421 (8th Cir.1998). The impetus behind the exception set forth in § 408(e) and other statutory ESOP provisions was Congress’s intent “to encourage employees’ ownership of their employer company.” Kuper, 66 F.3d at 1458. Under ERISA, a plan that primarily invests in the shares of stock of the employer that creates the plan is referred to as an ESOP. See id. at 1457. Congress intended ESOPs to function as both “an employee retirement benefit plan and a ‘technique of corporate finance’ that would encourage employee ownership.” Id. (quoting Martin v. Feilen, 965 F.2d 660, 664 (8th Cir.1992)). “Because of these dual purposes, ESOPs are not designed to guarantee retirement benefits, and they place employee retirement assets at much greater risk than the typical diversified ERISA plan.” Id. (citing Moench v. Robertson, 62 F.3d 553, 568 (3d Cir.1995) (quoting Martin, 965 F.2d at 664)). Even though ESOPs can be much riskier than a typical ERISA plan, the fiduciaries of these plans are still held to their fiduciary responsibilities, because the statutory exemptions for ESOPs do[ ] not relieve a fiduciary ... from the general fiduciary responsibility provisions of [29 U.S.C. § 1104] which, among other things, require a fiduciary to discharge his duties respecting the plan solely in the interests of plan participants and beneficiaries and in a prudent fashion ... nor does it affect the requirement ... that a plan must be operated for the exclusive benefit of employees and their beneficiaries. Kuper, 66 F.3d at 1458 (quoting Martin, 965 F.2d at 665 (quoting 44 Fed.Reg. No. 168 at p. 50,369 (Aug. 28, 1979))). Consequently, the duties required of a fiduciary shall be examined. B. Fiduciary Standards under ERISA “ERISA is a comprehensive statute designed to promote the interests of employees and their beneficiaries in employee benefit plans.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). Consequently, ERISA fiduciaries “must act for the exclusive benefit of plan beneficiaries.” How ard v. Shay, 100 F.3d 1484, 1488 (9th Cir.1996). The fiduciary duties are set forth in ERISA § 404(a)(1), which states: ... [A] fiduciary shah discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and- (A) for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan; (B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (C) by diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and (D) in accordance with the documents and instruments governing the plan.... 29 U.S.C. § 1104(a)(1). In Kuper, another panel of this court explained that the fiduciary duties enumerated under § 404(a)(1) had “three components”: The first is a “duty of loyalty” pursuant to which “all decisions regarding an ERISA plan ‘must be made with an eye single to the interests of the participants and beneficiaries.’ ” Berlin v. Michigan Bell Tele. Co., 858 F.2d 1154, 1162 (6th Cir.1988) (quoting Donovan v. Bierwirth, 680 F.2d 263, 271 (2d Cir.), cert. denied, 459 U.S. 1069, 103 S.Ct. 488, 74 L.Ed.2d 631 (1982)). The second obligation imposed under ERISA, the “prudent man” obligation, imposes “an unwavering duty” to act both “as a prudent person would act in a similar situation” and “with single-minded devotion” to those same plan participants and beneficiaries. Id. Finally, an ERISA fiduciary must “ ‘act for the exclusive purpose’ ” of providing benefits to plan beneficiaries. Id. (quoting [Bierwirth ], 680 F.2d at 271). Kuper, 66 F.3d at 1458. Clearly, the duties charged to an ERISA fiduciary are “the highest known to the law.” Howard, 100 F.3d at 1488 (quoting Bierwirth, 680 F.2d at 272 n. 8); see also Moench, 62 F.3d at 560 (describing a fiduciary’s obligations as “strict” and “detailed”). When enforcing these duties, “the court focuses not only on the merits of the transaction, but also on the thoroughness of the investigation into the merits of the transaction.” Howard, 100 F.3d at 1488 (citing Donovan v. Cunningham, 716 F.2d 1455, 1467 (5th Cir.1983); Donovan v. Mazzola, 716 F.2d 1226, 1233 (9th Cir.1983)). Failure to meet these high standards may result in personal liability for the fiduciary. See 29 U.S.C. § 1109(a); see also Kuper, 66 F.3d at 1458. IV. ANALYSIS The Court will now turn to the claims of error raised by defendants on appeal. A review of defendants’ brief demonstrates that they have three claims of error on appeal, in addition to another matter that was raised in a footnote. The Court will first examine the matter raised by defendants in a footnote, which concerns whether defendant GFGI is a party to this case and whether other defendants are fiduciaries. The Court will then examine defendants’ three remaining claims, which are: (1) whether there was a genuine issue of material fact to preclude summary judgment; (2) whether the district court erred in refusing to consider what a reasonable hypothetical fiduciary would have paid for the stock and whether there is a causation element for claims under ERISA § 406(a)(1), 29 U.S.C. § 406(a)(1); and (3) whether the district court’s award to the Hall Chemical ESOP participants was proper. As the following discussion will show, defendants cannot prevail on any of their claims. A. Defendants’ Claims as to Defendant GFGI and Defendants’ Fiduciary Status As an initial matter, the Court will address an issue that could possibly be dis-positive as to some defendants. This issue, raised by defendants in a footnote, contends that not all defendants are fiduciaries and that no allegations were made against defendant GFGI. The Court will address each claim in turn. 1. Defendant GFGI Defendants first argue that as to defendant GFGI, the Secretary “made no allegations and sought no relief against defendant GFGI in the count of the complaint dealing with the ESOP purchase of stock: the only mention of defendant GFGI is in count two of the complaint which was voluntarily dismissed by the [Secretary].” The Secretary responds to this argument by noting that it is raised for the first time on appeal. However, the Secretary does acknowledge this “pleading omission.” Generally, “[t]his court will not decide issues or claims not litigated before the district court.” White v. Anchor Motor Freight, Inc., 899 F.2d 555, 559 (6th Cir.1990) (citing Boddie v. Am. Broad. Cos., Inc., 881 F.2d 267, 268 n. 1 (6th Cir.1989); Yeiter v. Secretary Health and Human Servs., 818 F.2d 8, 11 (6th Cir.1987)). “[W]e review the case presented to the district court rather than a better case fashioned after the district court’s order.” White, 899 F.2d at 559 (quoting Adams v. James, 784 F.2d 1077, 1080 (11th Cir.1986)). However, “[w]e have, on occasion, deviated from the general rule in ‘exceptional cases or particular circumstances’ or when the rule would produce ‘a plain miscarriage of justice.’ ” Foster v. Barilow, 6 F.3d 405, 407 (6th Cir.1993) (internal quotations omitted) (quoting Pinney Dock and Transport Co. v. Penn Central Corp., 838 F.2d 1445, 1461 (6th Cir.1988) (citation omitted) (quoting Hormel v. Helvering, 312 U.S. 552, 557, 558, 61 S.Ct. 719, 85 L.Ed. 1037 (1941))); see also Singleton v. Wulff, 428 U.S. 106, 121, 96 S.Ct. 2868, 49 L.Ed.2d 826 (1976). Although there are exceptions to this general rule, they are narrow. See Foster, 6 F.3d at 407. The Court has discretion to resolve an issue that was not raised before the district court “where the proper resolution is beyond any doubt, or where injustice might otherwise result.” Enertech Elec., Inc. v. Mahoning County Comm’rs, 85 F.3d 257, 261 (6th Cir.1996) (citing Brown v. Crowe, 963 F.2d 895, 897-98 (6th Cir.1992); Newmyer v. Philatelic Leasing, Ltd., 888 F.2d 385, 387 (6th Cir.1989)). After reviewing the arguments presented in the briefs, as well as the record below, the Court finds no reason to address this issue which has been raised for the first time on appeal. As to the issue of whether injustice might result, in Smith v. CMTA-IAM Pension Trust, 654 F.2d 650 (9th Cir.1981), the Ninth Circuit was presented with a situation similar to the present case. In Smith, the parties conducted themselves before the district court as though there were an ERISA claim as well as another state law claim. See id. at 654 n. 2. However, these claims were never presented to the district court. See id. Consequently, the “Appellees argue[d] that the ERISA claim [could not] be raised ... because it was not properly before the district court.” See id. The Ninth Circuit disagreed, stating: Although [the] complaint was never technically amended to include either the ERISA or the state claim, both were fully argued in the parties’ pre-hearing memoranda as well as at the motions hearing. While we do not approve of appellant’s failure to adhere strictly to the procedures for amendment mandated by Fed.R.Civ.P. 15(a), where both parties have fully argued a claim below, we will treat the pleadings as though they have been amended for purposes of appellate review. See Riley v. MEBA Pension Trust, 570 F.2d 406, 408 (2d Cir.1977); Sherman v. Hallbauer, 455 F.2d 1236, 1242 (5th Cir.1972); Bobrick Corp. v. American Dispenser Co., Inc., 377 F.2d 334, 337 (9th Cir.1967); Aluminum Co. of America v. Admiral Merck Motor Freight, Inc., 337 F.Supp. 674, 683-84 (N.D.Ill.1972), affirmed, 486 F.2d 717 [ (7th Cir.) ], cert. denied, 414 U.S. 1113, 94 S.Ct. 843, 38 L.Ed.2d 739 [1973]. Smith, 654 F.2d at 654 n. 2. In the present case, no injustice will result because, as in Smith, all parties conducted themselves before the district court as though defendant GFGI were a party to this case. First and foremost, defendant GFGI was named in the caption at all stages before the district court. Second, the Secretary’s motion for summary judgment and her reply brief treat defendant GFGI as though it is a party, referring collectively to “the defendants.” Third, defendants’ responsive brief also refers to themselves collectively as defendants. Fourth, the district court’s various opinions contemplate that each defendant is a party to the case, as they also refer to “the defendants” collectively. Consequently, because all parties acted as though defendant GFGI was a party, and in such instances other courts have treated the complaint as though it had been amended, see id., the Court finds that no injustice will result from treating defendant GFGI as any other defendant in the present case. Further, the Court finds the resolution of the issue of whether defendant GFGI is a defendant is not in doubt. Other courts have allowed pleadings to be amended at a very late stage in similar circumstances. See id. Therefore, it is quite possible that the Secretary’s complaint could be amended at this late stage. Consequently, the Court declines to address the issue of whether defendant GFGI is a proper party in this case because no injustice will result and resolution of the matter would most probably not be in defendant’s favor. 2. Defendants’ Fiduciary Status Defendants also contend that they are not all fiduciaries. With no citation to authority, defendants argue that defendant Hall Holding and defendant Goldman were alleged to be fiduciaries solely because they appointed the ESOP trustees, but there is no allegation, and [the Secretary] offered no evidence, that appointing Messrs. Ahearn and Shields was somehow a breach of fiduciary duty or had anything to do with the price paid for the stock. Defendants also argue that the district court erroneously “assumed” that [defendant] Keating was a fiduciary, which is a complete mischaracterization of the proceedings before the district court. In its opinion, the district court explained its determination as to the issue of defendants’ fiduciary status: The only argument the defendants make to contest the Secretary’s position that each defendant is a fiduciary under ERISA is that the actions and decisions of the defendants surrounding the stock purchase were corporate or sponsor actions not subject to ERISA’s fiduciary standards. As discussed above, this argument is rejected. The defendants have not otherwise challenged the Secretary’s characterization of them as fiduciaries. In fact, the defendants explicitly state that if the Court does reject their sponsor/fiduciary distinction argument, they “are not afraid to argue this case on the Secretary’s theory....” Therefore, in fight of the defendants’ position and this Court’s own legal opinion that the defendants were indeed fiduciaries, the Court holds that the defendants were Hall [Chemical ESOP] fiduciaries during the time in question. Reich v. Hall Holding Co., 990 F.Supp. 955, 963 n. 9 (N.D.Ohio 1998). It is clear from the district court’s opinion that defendants considered the issue of whether they were fiduciaries. Defendants chose to contest their fiduciary status only by arguing that the decisions made concerning the purchase of Hall Holding stock were corporate decisions, not fiduciary decisions. Defendants cannot now hope to argue that they were not fiduciaries at all, because the Court only reviews “the case presented to the district court rather than a better case fashioned after the district court’s order.” White, 899 F.2d at 559 (quoting Adams, 784 F.2d at 1080). Consequently, because this issue was not raised before the district court, this Court will not review it for the first time on appeal. B. Defendants’ First Claim of Error Defendants’ first claim on appeal is that the district court erred in granting summary judgment because there was a genuine issue of material fact as to whether defendants complied with their fiduciary duties. In conjunction with this argument, defendants raise seven different sets of facts which they claim demonstrate that a genuine issue of material fact existed. However, after reviewing the record, the Court finds that the district court properly granted the Secretary’s motion for summary judgment. 1. Defendants’ Reliance on Cunningham’s Valuation In an attempt to demonstrate a genuine issue of material fact, defendants first point to Cunningham’s valuation. The most troubling aspect of defendants’ argument concerning the valuation is their statement that “defendants made sure that Mr. Cunningham had access to all of the information he needed to prepare the valuation.” Simply put, this is not true. A review of Cunningham’s deposition testimony reveals that he was not fully informed of all circumstances when he completed his valuation of Hall Chemical. Cunningham testified that he was asked by an official at defendant GFGI to do a valuation of Hall Chemical and that he was unaware that the purpose of the valuation “was to establish a value to have an ESOP buy a stake in Hall Chemical.” Cunningham also testified that the official at defendant GFGI may have said something about an ESOP, but this “wouldn’t have changed how I did the valuation.” Asked why this would not have changed the valuation, Cunningham explained that he was not asked to consider the Hall Chemical ESOP. He stated that he “was asked to value Hall Chemical Company. That’s all I was asked to do.” After this testimony, the following exchange took place between counsel for the Secretary and Cunningham: Q. So let’s say that I come in and charge you with the following. I want you to conduct a valuation that will tell me how much an ESOP should pay for stock in a company that it wants to buy. Would your valuation be different? A. Well, you’ve asked me a different question. Q. That’s right. Would the valuation be different? A. Yes. I would have done a second— probably a second — I would have been forced, had I been willing to take on that assignment, I would have been forced to do a second stage, if you will, valuation. Q. And what would that have entailed? A. That would have involved what — if Hall Chemical Company is worth X and the ESOP is going to buy some percentage of X, that would have involved what is a minority stake in a privately held company worth. Q. And you’re saying that you didn’t conduct such a valuation because you weren’t asked to? A. No, I was not asked to. I didn’t do it. In Howard v. Shay, 100 F.3d 1484 (9th Cir.1996), the Ninth Circuit discussed the use of and reliance upon financial advisors and legal counsel. “Although securing an independent assessment from a financial advisor or legal counsel is evidence of a thorough investigation, Martin v. Feilen, 965 F.2d 660, 670-71 (8th Cir.1992), it is not a complete defense to a charge of imprudence.” Howard, 100 F.3d at 1489 (citing Donovan v. Mazzola, 716 F.2d 1226, 1234 (9th Cir.1983)). Further, “independent expert advice is not a ‘whitewash.’ ” Id. (citing Donovan v. Bierwirth, 680 F.2d 263, 272 (2d Cir.1982); Donovan v. Walton, 609 F.Supp. 1221, 1227 n. 10 (S.D.Fla.1985); Cator v. Herrgott & Wilson, Inc., 609 F.Supp. 12, 16 (N.D.Cal.1984)). Consequently, the Ninth Circuit promulgated three requirements, which this Court adopts, for a fiduciary of an ESOP when relying upon expert advice: The fiduciary must (1) investigate the expert’s qualifications ... (2) provide the expert with complete and accurate information ... and (3) make certain that reliance on the expert’s advice is reasonably justified under the circumstances. Howard, 100 F.3d at 1489. In the present case, the parties do not dispute Cunningham’s qualifications to value Hall Chemical. The concern with the valuation comes under the second and third requirements. As to the second requirement, it is clear that Cunningham was not provided with complete and accurate information. His own testimony established that his only job was to valúate Hall Chemical. Cunningham testified that something may have been mentioned about an ESOP, but that, as explained to him, this had no effect on his task of valuating Hall Chemical. Basically, Cunningham was never given the true purpose for which his valuation was to be used. Had Cunningham been given full information, he testified that he would have done a different valuation. In addition to these concerns, Cunningham’s valuation did not take into account defendant Ahearn’s rights to acquire 5% of Hall Chemical and, as defendant Shields testified, the net liability number that Cunningham used in the valuation failed to account for somewhere between $400,000.00 and $500,000.00. As to the third requirement, the Court finds that it also has not been satisfied. Rebanee upon Cunningham’s valuation was not justified under the circumstances present in this case. Cunningham valued Hall Chemical, not Hall Holding. However, Cunningham’s valuation of Hall Chemical was used to estabbsh Hall Holding’s value. Although it is true that Hall Chemical was the major asset of Hall Holding, the fact remains that HaU Chemical and Hall Holding are two different entities. Therefore, if defendants wished to sell the stock of Hall Holding, then they should have had that company appraised, not HaU Chemical. In sum, defendants’ reliance upon Cunningham’s valuation is not a defense in this case. As the previous discussion demonstrated, Cunningham was not provided with complete and accurate information. Further, defendants’ reliance on Cunningham’s valuation of Hall Chemical in determining Hall Holding’s value was not reasonably justified. Instead, defendants’ reliance on his valuation was a breach of defendants’ fiduciary duties under § 404(a)(1). Specifically, defendants breached the “prudent man” obligation, which the court in Kwper explained was one of the duties under § 404(a)(1). In determining the value of the 110 shares of Hall Holding stock, defendants did not act “as a prudent person would act in a similar situation,” nor did they act with a “single-minded devotion” to the Hall Chemical ESOP participants. Rather, defendants failed to give Cunningham the information he needed to make a proper valuation, and, without input from any expert, including Cunningham, they assumed that the valuation of Hall Chemical was the same as a valuation of Hall Holding. Consequently, the Court finds these problems alone are enough to affirm the district court’s holding. There is no genuine issue of material fact in this case; a violation of 29 U.S.C. § 1106(a)(1) occurred. 2. Other Concerns with Defendants’ Determination of the Purchase Price for the Hall Holding Stock In addition to the issues surrounding Cunningham’s valuation, the Court would note several other concerns with the process of determining the price for the 110 shares of Hall Holding stock. First, even though defendant Ahearn and defendant Shields were the trustees of the Hall Chemical ESOP, they had very little to do with the major decisions that concerned it. During his deposition, defendant Ahearn testified that he never consulted with legal counsel concerning the setup of the Hall Chemical ESOP and that he went to one meeting with Shumaker at which defendant Keating and defendant Shields were present. Further, defendant Ahearn also had no input on the price that was to be paid by the Hall Chemical ESOP for the purchase of the Hall Holding shares. Defendant Ahearn testified that he was told that the value for Hall Holding was the midpoint of Cunningham’s valuation of Hall Chemical, which was approximately $35 million. Eventually, the $3.5 million purchase price was derived from this midpoint figure; however, defendant Ahearn had no input on these decisions, nor was he aware of how the values were determined. Defendant Shields testimony is very similar to defendant Ahearn’s in that he also had very little input on the Hall Chemical E SOP’s purchase of the stock, even though he was a trustee. Initially, defendant Shields testified that the Hall Chemical ESOP was originally going to purchase stock in Hall Chemical. At some later date, the decision was made to purchase stock in Hall Holding instead. Defendant Shields testified that defendant Keating made the decision to purchase stock in Hall Holding and that he did not help make that decision. In addition, Article 11.4 of the Hall Chemical Company Employee Stock Participation Plan requires that “[t]he company shall notify the Trustee of the identity of the Administrator” However, defendant Shields testified that as to his recollection, he did not remember an administrator being appointed. As to Cunningham’s valuation, defendant Shields testified that he never consulted with Cunningham, had no input into the decision to hire Cunningham, nor did he know what documents Cunningham reviewed in preparation of the valuation. Further, defendant Shields did not know if defendant Ahearn had any input into the decision to hire Cunningham. Defendant Shields believed that defendant Keating was the person that made the arrangements to conduct the valuation. Finally, the following exchange took place between defendant Shields and one of the Secretary’s attorneys: Q. ... How was it decided that the ESOP would purchase $3.5 million worth of shares? How did we arrive at that number? A I have no idea. Q. You’re the trustee of the ESOP, correct? A. Uh-huh. Q. Or at least at that time you were? A. Uh-huh. Q. And you don’t know how the 3.5 million was arrived at? A. I wasn’t the owner. I would expect the owner decides how much of the company he’s willing to sell- In Howard, the Ninth Circuit was troubled by the fact that “[t]he fiduciaries completed the transaction without negotiation.” Howard, 100 F.3d at 1489. In the present case, not only did the fiduciaries completely fail to negotiate as to the purchase price for the Hall Holding stock, but they were generally unaware of who determined the purchase price. In addition to the concerns raised by defendant Ahearn and defendant Shields, the deposition testimony of defendant Keating is even more disturbing. First, defendant Keating testified regarding the loan from the Master Trust to fund the purchase of Hall Holdings shares. The following exchange took place during defendant Keating’s testimony: Q. ... At the time you were considering the ESOPs, loaning, borrowing money to make this purchase, did you have a, a particular interest rate in mind? A. From the ESOP standpoint, or from the Master Trust standpoint? Q. From the ESOP standpoint. A. I was more concerned from the Master Trust standpoint, so no. I wanted to get a rate that was favorable to the Master Trust. Defendant Keating also testified that after receiving Cunningham’s draft valuation report, she reviewed it and solicited input from defendant Ahearn and Shumaker. However, she specifically stated that she “most probably” did not speak with the other trustee, defendant Shields, about the draft valuation. The most disturbing part of defendant Keating’s testimony concerned the determination of the price to pay for the Hall Holding stock. Defendant Keating testified that besides herself, defendant Goldman and maybe one other person was involved in determining the price. However, neither defendant Ahearn nor defendant Shields, the two trustees, were involved in setting the price. Finally, defendant Keating’s testimony as to how she reached the price of $3.5 million is extremely disconcerting. This testimony was set forth in the background section, but it bears repeating here. She testified that the high and low end of Cunningham’s valuation range, $32.4 and $37.4 million, were added and divided by two, and the resultant figure, 34.9, was multiplied by the amount of stock to be purchased, which defendant Keating erroneously said was 9.9%. The product of these two numbers was 3.4551. However, instead of taking $3.4551 million as the purchase price, the amount was determined to be $3.5 million. Defendant Keating explained: Given these values, I would do exactly the same number today, which is almost directly in the middle except it’s a round number, so for purposes of communication, purposes of the documentation, it just would work better at 3.5 million than 3.[4551], which is, after all, you know, you know, .1 percent of the transaction or something that we’re talking about here. Essentially, defendant Keating’s testimony demonstrates that she was willing to charge the Hall Chemical ESOP an extra $44,900.00, the difference between the actual $3.5 million purchase price and $3,445,100.00, “for purposes of communication.” . Again, the Court has held that the above-discussed issues with Cunningham’s valuation alone are enough to affirm the district court’s holding that a violation of 29 U.S.C. § 1106(a)(1) occurred. Nonetheless, the preceding discussion was intended to show the numerous concerns with the creation of the Hall Chemical ESOP. Essentially, the facts demonstrate that the Hall Chemical ESOP was established in an environment where the trustees were unaware of what was going on, the trustees were not consulted on major decisions affecting the Hall Chemical ESOP, there was no negotiation as to the price of the Hall Holding stock, there was more concern for the return on investment for the Master Trust, and the inconvenience of dealing with uneven numbers could justify charging the Hall Chemical ESOP an additional $44,900.00 for the stock it purchased. Such facts demonstrate not only the uniquely careless and haphazard manner in which the Hall Chemical ESOP was created, but also clear violations of defendants’ fiduciary duties. In fact, reviewing the discussion in Ku-per of a fiduciary’s duties under § 404(a)(1), it is clear that each of the three duties was breached by at least one defendant in this matter. See Kuper, 66 F.3d at 1458. Defendant Keating’s testimony that she was more concerned about getting an interest rate favorable to the Master Trust, and the failure of defendant Ahearn or defendant Shields to question this, demonstrate that the duty of loyalty was breached. None of these three defendants acted with an “eye single to the interests” of the Hall Chemical ESOP participants. As to the “prudent man” standard, the trustee’s utter failure to be involved in the price charged for the Hall Holding stock demonstrates that this duty was breached. Further, it is difficult to believe that any prudent person would use the valuation of a different company and rely on it when not all relevant information was given to the expert conducting the valuation. Finally, the fiduciaries did not “act for the exclusive purpose” of providing benefits to the Hall Chemical ESOP participants. Instead, the purchase price was rounded up so it was easier to communicate, and the trustees were unaware that any of this was taking place. The decisions were simply made with no input from the people that a had a fiduciary duty to be involved in the decisions. These breaches of fiduciary duty simply reinforce this Court’s finding that the district court was correct in granting the Secretary’s motion for summary judgment as there are no genuine issues of material fact. C. Defendants’ Second Claim of Error Defendants’ next claim of error on appeal is that the district court erred in not finding what a hypothetical reasonable fiduciary would have paid for the 110 shares of Hall Holding stock. Essentially, defendants argue that if a hypothetical reasonable fiduciary would have paid the same price for the shares as the Hall Chemical ESOP did, then defendants cannot be liable. However, as the following discussion will show, a violation of § 406 is a per se violation, notwithstanding the price a reasonable hypothetical fiduciary would have paid for the stock. 1. Herman v. Mercantile Bank, N.A. In their brief on appeal, defendants rely on Herman v. Mercantile Bank, N.A., 143 F.3d 419 (8th Cir.1998), in support of their position that the district court erred when it did not make a determination as to the price a reasonable hypothetical fiduciary would have paid. In Mercantile Bank, a closely held corporation called Lenco established an ESOP under which its employees owned stock. Mercantile Bank was the ESOP’s trustee, and on April 5, 1984, sold the ESOP’s stock to a person named Jerry Ford. Apparently, Ford engaged in several transactions which resulted in him owning all of Lenco’s stock. On that same day, Mercantile Bank was replaced as the ESOP’s trustee by Paul Mueller. The day after these transactions took place, Mueller had the ESOP repurchase the stock from Ford at the same price it had sold the stock on the prior day. In 1985, Mueller passed away, and Mercantile Bank again took over as trustee of the ESOP. Over the next few years, Lenco began to experience financial problems which culminated in filing for bankruptcy on June 20, 1989. Id. at 421. In addition to these facts, the dissenting opinion had the following to add: Before the ESOP sold its stock to Ford, the ESOP owned 33.3% of the outstanding stock. The next day, when the ESOP bought back the stock for the same price per share, it owned 63.2% of the outstanding stock because Lenco had used most of the proceeds of the [bank] loan to Lenco to redeem 230,826 of its previously outstanding shares mostly held by Ford. Even though the ESOP now owned a greater stake in Lenco, Lenco now had extraordinary debt, restrictions on its cash flow as a condition of [a bank] loan, and greatly reduced equity. Before the leveraged buyout, Lenco’s total liabilities equaled $1,917,442.00. After the buyout, Lenco’s total liabilities tripled to an amount exceeding six million dollars. Before the buyout, Lenco reported an equity (book) value of $5.4 million. The [bank] loan of $5.25 million almost wiped out this equity. Ford added no assets or other equity as part of the buyout. Thus, Lenco went from a substantial business with over five million dollars in equity to a corporation with great debt and practically no equity. Id. at 424 (Bright, J., dissenting) (footnotes omitted). In addition, Mercantile Bank was also the trustee over two testamentary trusts that had been established by the deceased owner of Lenco. The primary asset of these trusts was the majority of voting stock in Lenco. The same person at Mercantile Bank, Jack Niemeyer, was the representative for the ESOP and the trusts on Lenco’s board of directors. Id. at 423. Further, the dissent touched upon the minimal amount of investigation undertaken by Mercantile Bank. Although Mercantile Bank conducted a valuation of Lenco prior to the sale and buy-back, it knew little about Ford’s financing plans: Ford provided Mercantile with a copy of a two paragraph, preliminary commitment letter from his financing bank.... The letter neglected to identify any terms of the loan, its amount, its borrowing formula, or the interest rate. Mercantile did nothing further to verify the financial feasibility of Ford’s takeover of Lenco. Id. at 424 (footnote omitted). Finally, Mercantile made no investigation as to its replacement, Mueller, or his intentions. Id. After noting that an ESOP may only purchase an employer’s stock for adequate consideration, the Eighth Circuit held: Even if a trustee fails to make a good faith effort to determine the fair market value of the stock, “he is insulated from Lability if a hypothetical prudent fiduciary would have made the same decision anyway.” Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 919 (8th Cir.1994). Thus, if a prudent trustee would have purchased the Lenco stock for the price for which Mueller purchased it, then Mueller did not violate ERISA, regardless of whether he made a good faith effort to determine the fair market value of the stock. Id. at 421. The Eight Circuit then reviewed the evidence presented at trial. The expert witness for each side presented vastly different values for Lenco. The district court concluded that each expert was credible, and that even if Mueller did overpay, it was only slightly and Mueller had no reason to know the ESOP overpaid for Lenco’s stock. The Eight Circuit concluded that “[t]his amounts to a finding that a hypothetical prudent fiduciary in Mueller’s place could have and would have paid what Mueller paid for the stock” and therefore ERISA was not violated. Id. at 421-22. Obviously, the dissent disagreed with majority’s conclusion. After discussing the high fiduciary standards to which trustees of ESOPs are held, the dissent examined the “adequate consideration” exception to § 406(a)(1)(A) and (D) and the definition of that term: ERISA §§ 406(a)(1)(A) and (D), 29 U.S.C. §§ 1106(a)(1)(A) and (D), prohibit a plan from buying or selling securities issued by the plan’s employer sponsor because such transactions carry an inherent risk of “self-dealing” and “conflicts of interest.” However, Congress created § 408(e) of ERISA, 29 U.S.C. § 1108(e), to provide a narrow exemption to the § 406(a) prohibition. Section 408(e) permits employee benefit plans to purchase or sell employer securities only if the sale or purchase of the securities is for adequate consideration. The definition of “adequate consideration” under ERISA imposes a two-fold requirement: (1) the price paid must reflect the fair market value of the asset, and (2) the trustee must conduct a careful and independent investigation of the circumstances prevailing at the time of the investment. Donovan v. Cunningham, 716 F.2d 1455, 1467-68 (5th Cir.1983). Id. at 425 (Bright, J., dissenting) (emphasis added). The dissent concluded that Mercantile Bank violated its duties in three separate ways: (1) by failing to conduct an independent investigation of the transactions at issue and Ford; (2) “by failing to investigate whether the details of the sale transaction would advantage the ESOP employee beneficiaries”; and (3) by failing to correct its past failures when it resumed its position as trustee after Ford’s death. Id. After reviewing both positions, the Court finds that the position announced in the dissenting opinion in Mercantile Bank is much more persuasive. Were the Court to adopt the position espoused by defendants and the majority in Mercantile Bank, the Court would be required to ignore a portion of the definition of “adequate consideration.” The Court believes such an interpretation is improper and contrary to Congress’s intent. ERISA § 406(a)(1) prohibits transactions in which an employee benefit plan purchases stock from the employer. 29 U.S.C. § 1106(a)(1). However, the exception to this rule is found in § 408(e), which states that § 406(a)(1) shall not apply if the purchase is for “adequate consideration.” 29 U.S.C. § 1108(e). ERISA § 3(18)(B) defines “adequate consideration” in the closely held corporation situation as “the fair market value of the asset as determined in good faith by the trustee....” 29 U.S.C. § 1002(18)(B). As explained by the dissent in Mercantile Bank, the definition of “adequate consideration” has two distinct parts. First, there is the “fair market value” part, then there is the “as determined in good faith by the trustee” part. 29 U.S.C. § 1002(18)(B). However, the majority opinion in Mercantile Bank gives no weight to the good faith determination under § 3(18)(B). See 29 U.S.C. § 1002(18)(B). In Donovan v. Cunningham, 716 F.2d 1455 (5th Cir.1983), the Fifth Circuit stated that “[t]he focus of the inquiry is how the fiduciary acted in his selection of the investment, and not whether his investments succeeded or failed.” Id. at 1467 (quoting 19B S. Young, Business Organizations, § 17.02[3]). The Fifth Circuit then explained that when determining whether “adequate consideration” has been paid, it is not enough that a fiduciary, by chance, arrived at fair market value: ERISA’s requirement that ESOP fiduciaries purchase employer stock for “adequate consideration” must be interpreted so as to give effect to the Section 404 duties to which those persons remain subject. In this regard, it is especially significant that the adequate consideration test, like the prudent man rule, is expressly focused upon the conduct of the fiduciaries. A court reviewing the adequacy of consideration under Section 3(18) is to ask if the price paid is “the fair market value of the asset as determined in good faith by the ... fiduciary,” it is not to redetermine the appropriate amount for itself de novo. Contrary to the appellees’ contentions, this is not a search for subjective good faith — a pure heart and an empty head are not enough. The statutory reference to good faith in Section 3(18) must be read in light of the overriding duties of Section 404. Doing so, we hold that the ESOP fiduciaries will carry their burden to prove that adequate consideration was paid by showing that they arrived at their determination of fair market value by way of a prudent investigation in the circumstances then prevailing. Id. at 1467-68 (emphasis in original) (footnotes omitted); see also Reich v. Valley Nat. Bank of Arizona, 837 F.Supp. 1259, 1280-81 (S.D.N.Y.1993). Returning to the present case, the Court finds that the district court did not err in failing to determine whether a hypothetical reasonable fiduciary would have purchased the Hall Holding stock at the same price. When determining “adequate consideration,” § 3(18)(B) requires not only a determination of fair market value, but also an examination of the process that led to the determination of fair market value in light of § 404’s fiduciary duties. As the discussion in the prior section demonstrated, defendants did not make a good faith determination as to the price of the Hall Holding stock. This lack of good faith is demonstrated by the following: (1) Defendants’ reliance on Cunningham’s valuation was improper because Cunningham was not given all of the information he needed to complete the valuation and because he valued the wrong company; (2) the trustees were generally unaware of what was going on; (3) the trustees were not consulted on major decisions, such as the price to pay for Hall Holding stock; (4) there was no negotiation as to the price of the Hall Holding stock; (5) there was more concern for the return on investment for the Master Trust; and (6) the Hall Chemical ESOP was charged several thousand dollars more so that defendants could deal in round numbers. These facts clearly demonstrate that defendants engaged in a prohibited transaction. Because defendants did not engage in a good faith determination of the fair market value of Hall Holding stock, the definition of “adequate consideration” under § 3(18)(B) was not satisfied. See 29 U.S.C. § 1002(18)(B). Therefore, the Court specifically rejects defendants’ contention and finds that the price paid by a hypothetical reasonable fiduciary is irrelevant in determining whether defendants violated § 406(a)(1). 2. Kuper v. Iovenko In addition, defendants also argue that were the Court to agree with the district court, it would ignore the holding in Kuper v. Iovenko, 66 F.3d 1447 (6th Cir.1995). In Kuper, another panel in this circuit stated: However, a fiduciary’s failure to investigate an investment decision alone is not sufficient to show that the decision was not reasonable. Instead, to show that an investment decision breached a fiduciary’s duty to act reasonably in an effort to hold the fiduciary liable for a loss attributable to this investment decision, a plaintiff must show a causal link between the failure to investigate and the harm suffered by the plan. Id. at 1459 (emphasis in original) (citing Diduck v. Kaszycki & Sons Contractors, Inc., 974 F.2d 270, 279 (2d Cir.1992)). As explained by defendants, a showing of “causation” is required to show a violation of § 406. This Court disagrees with defendants’ claim and finds that the holding in Kuper is inapplicable to the present case as Kuper only addressed violations of § 404, not § 406. In Kuper, this Circuit was faced with the question of whether fiduciaries of an ESOP that only held stock of the employer could be held liable for failing to diversify or liquidate its holdings. In that case, the plaintiffs were employees of a division of Quantum Chemical Corporation (hereinafter “Quantum”) that participated in an ESOP. Quantum decided to sell the division in question to -another corporation. The transaction was completed on Apri