popular name for the legal separation between a commercial bank and its trust department, designed to prevent conflicts of interest that may influence the trust department's roe as a fiduciary and investment advisor for trust accounts.
imaginary barrier between departments of a service company (broker, consultant) constructed in an effort to avoid a conflict of interest.
imaginary barrier between the investment banking, corporate finance, and research departments of a brokerage house and the sales and trading departments. Since the investment banking side has sensitive knowledge of impending deals such as takeovers, new stock and bond issues, divestitures, spinoffs and the like, it would be unfair to the general investing public if the sales and trading side of the firm had advance knowledge of such transactions. So several SEC and stock exchange rules mandate that a Chinese Wall be erected to prevent premature leakage of this market-moving information. It became law with the passage of SEC Rule 10b-5 of the Securities Exchange Act of 1934. The investment banking department uses code names and logs of the people who have access to key information in an attempt to keep the identities of the parties secret until the deal is publicly announced.
