| a system of fortified walls with a roadway along the top, constructed as a defense for China against the nomads of the regions that are now Mongolia and Manchuria: completed in the 3rd century b.c., but later repeatedly modified and rebuilt. 2000 mi. (3220 km) long. |
| Chinese wall n. A barrier, especially one that seriously hinders communication or understanding: "still believe a Chinese wall can exist between public and private selves" (Gail Sheehy). [After the Great Wall of China.] |
A stone wall extending for fifteen hundred miles across northern China. Built to defend the Chinese border in ancient times, it has become a favorite destination for visitors to the country.
Chinese Wall
The ethical (not physical) barrier between different divisions of a financial (or other) institution to avoid conflict of interest. A Chinese Wall is said to exist, for example, between the corporate-advisory area and the brokering department to separate those giving corporate advice on takeovers from those advising clients about buying shares. The "wall" is thrown up to prevent leaks of corporate inside information, which could influence the advice given to clients making investments, and allow staff to take advantage of facts that are not yet known to the general public.
Investopedia Commentary
Maintaining client confidentiality is crucial to any firm, but particularly large multi-service businesses. Where firms are providing a wide range of services, clients must be able to trust that information about themselves will not be exploited for the benefit of other clients with different interests. And that means clients must be able to trust in Chinese Walls. Some Wall Street scandals in recent years, however, have made some people doubt the effectiveness of Chinese Walls, as well placed executives of respectable firms have traded illegally on inside information for their own benefit.
Related Links
What Is the "Chinese Wall"?
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What Was The Glass-Steagall Act?
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See also: Broker, Firewall, Front Running, Glass-Steagall Act, Insider Information, Insider Trading, Investment Banker
Chinese wall