Party-in-Interest Transactions — otherwise legitimate transactions that are prohibited under the Employee
Retirement Income Security Act (ERISA). The Act defines a party-in-interest as
any fiduciary, legal counsel, employee of an employer-sponsored benefit plan,
or service provider to the plan. Accordingly, pension plan funds cannot be used
to buy or sell property to or from a person who is a party-in-interest. For
example, a pension plan could not purchase shares of stock in a company owned
by a member of the company's investment committee. ERISA provides for
specific monetary fines and penalties for violations of party-in-interest
rules. Fiduciary liability insurance policies cover the defense costs incurred
in conjunction with allegations of party-in-interest violations; although no
coverage is available for damages, fines, and penalties associated with such
claims.