Prohibited Transaction

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I would like your opinions on whether or not the following situation is a prohibited transaction:

A plan sponsor has a brother-in-law as the plan broker. The brother-in-law owns an outside business. The broker wants the plan sponsor to invest part of his own segregated account (not other participants) into the privately held stock of this company. Is this a prohibited transaction?

[Lori Friedman]

Here's my take on the situation:

For the purposes of federal tax law, both Broker and Company are disqualified persons. Broker provides services to the plan [i.R.C. Sec. 4975(e)(2)(B)] and owns a 50% or more interest in Company [i.R.C. Sec. 4975(e)(2)(G)(i)].

For ERISA purposes, both Broker [ERISA Sec. 3(14)(A)] and Company [ERISA Sec. 3(14)(G)(i)] are parties-in-interest.