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A Chinese wall is an information barrier that is set up within an organization to prevent conflict of interest. It is an ethical and legal concept that is typically implemented with a series of compliance controls. In some industries, Chinese walls are a legal requirement that are monitored by regulatory agencies.
Banks use Chinese walls to separate advice to companies such as mergers & acquisitions from management of funds. The purpose is to prevent the leak of insider information to anyone who is managing money or advising brokerage clients.It is also common for law firms and accounting firms to use a Chinese wall to protect confidential information. Media organizations may also set up a Chinese wall to prevent advertisers from attempting to influence the accuracy of news or integrity of creative productions.
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Type | | Definition | | Origin | The term originates in the United States with efforts to strengthen securities industry regulations after the Wall Street Crash of 1929.The term is an analogy to the Great Wall of China and isn't intended to have ethnic or national connotations. | Notes | A Chinese wall may be purely ethical in nature or may be a legal requirement. In many cases, it is supported by information and physical security. | Related Concepts | |
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