242
Opinion of the Court
loyalty to the plan's beneficiaries, § 404(a), by categorically barring certain transactions deemed "likely to injure the pension plan," Commissioner v. Keystone Consol. Industries, Inc., 508 U. S. 152, 160 (1993). Section 406(a)(1) provides, among other things, that "[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 . . . sale or exchange . . . of any property between the plan and a party in interest." 29 U. S. C. § 1106(a)(1)(A). Congress defined "party in interest" to encompass those entities that a fiduciary might be inclined to favor at the expense of the plan's beneficiaries. See § 3(14), 29 U. S. C. § 1002(14). Section 406's prohibitions are subject to both statutory and regulatory exemptions. See §§ 408(a), (b), 29 U. S. C. §§ 1108(a), (b).
This case comes to us on the assumption that an ERISA pension plan (the Ameritech Pension Trust (APT)) and a party in interest (respondent Salomon Smith Barney (Salomon)) entered into a transaction prohibited by § 406(a) and not exempted by § 408.1 APT provides pension benefits to employees and retirees of Ameritech Corporation and its subsidiaries and affiliates. Salomon, during the late 1980's, provided broker-dealer services to APT, executing nondiscretionary equity trades at the direction of APT's fiduciaries, thus qualifying itself (we assume) as a "party in interest." See § 3(14)(B), 29 U. S. C. § 1002(14)(B) (defining "party in interest" as "a person providing services to [an employee benefit] plan"). During the same period, Salomon sold interests in several motel properties to APT for nearly $21 million. APT's purchase of the motel interests was directed by National Investment Services of America (NISA), an investment manager to which Ameritech had delegated investment
1 Salomon has preserved for remand arguments that there is no § 406(a) prohibition because it is not a "party in interest" and that, in any event, the transaction is exempted by Prohibited Transaction Exemption 75-1, 40 Fed. Reg. 50847 (1975).
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