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1. One of ERISA's key objectives is to protect the interests of employee benefit plan participants and their beneficiaries. Many sections can be found within ERISA that describe what prohibited transactions are and what will occur in the event a prohibited transaction occurs.

For example, Section 403 of ERISA discusses the rules for establishing employee benefit plans. While 403 doesn't explicitly detail the prevention of prohibited transactions like Sections 404, 406, and 407, it indirectly contributes to this prevention of prohibited transactions by establishing requirements for the establishment and maintenance of employee benefit plans.

Section 404 of ERISA outlines the fiduciary duties that apply to those who manage and administer employee benefit plans. This section sets the standard for how Fiduciaries are required by requiring them to act solely in the interest of plan participants and beneficiaries, with prudence, loyalty, and care.

Section 406 is the most definitive section of ERISA because it identifies specific types of transactions that are prohibited under the law. Section 406 also has many subsections that describe in great detail items ranging from transactions between the plan and a fiduciary to Transfers of property to plans by parties in interest. These prohibited transactions can range from items such as self-dealing and conflicts of interest between a fiduciary and a plan sponsor for example.

Section 407 of ERISA outlines exemptions to certain prohibited transactions that meet specific conditions. Exemptions outlined in this section allow certain plan transactions that may otherwise be prohibited from occurring and usually only occur if they meet certain criteria and safeguards. Exemptions are granted if the transaction is in the best interest of plan participants and beneficiaries or if it is necessary for the plan's operations.

Lastly, section 502 ( c) (1) addresses Fiduciary responsibility breaches and provides for the secretary to assess a civil penalty against such fiduciary or person in an amount equal to 20 percent of the applicable recovery amount. Penalties for reporting and disclosures can be found in Section 502 (3) (c) which provides for Discretionary penalties assessed by courts against employers failing to meet certain reporting requirements.

2.  (a) of ERISA addresses prohibited transactions by fiduciaries and parties in interest, stating any transaction that involves a fiduciary and a party in interest (PII) is normally a prohibited transaction. A key factor when reviewing is determining who stands to benefit from the transaction - PII or fiduciary (or any other parties as categorized as having a direct or indirect relationship to the ERISA plan).

The lecture videos reviewed examples of prohibited transactions with regard to PII's as defined in Section 3(14) (A). One scenario reviewed a transaction in which Mike Kelly, a fiduciary (party in interest), in which Kelly took a loan from the plan (Section 406(a) defines "lending of money or other extension of credit between the plan and party in interest" as a prohibited transaction). Regardless if Kelly may or may not have been able to pay the loan back to the plan, an ERISA violation occurred (by the nature of the transaction). These actions were also not acting in the best interest in the plan participants and/or beneficiaries (considering the consequence that money may not be available to those individuals upon retirement), hence the need for oversight as provided under ERISA.

ERISA's design to prevent prohibited transactions from "unscrupulous business people," provides a framework of consistent regulatory behaviors addressing specific prohibited transactions and a "catchall" of general prohibited transactions to ultimately protect plans, as well as the participants and/or beneficiaries of those plans.