Origin of Chinese wallafter Chinese Wall
Origin of Chinese wallAfter the Great Wall of China
(plural Chinese Walls)
Often considered pejorative. However, it remains a technical term in relatively common use in financial and legal discourse.
The expression Chinese Wall comes from the Great Wall of China and became a metaphor of barriers, known to go back to the United States stock market crash of 1929. The U.S. government saw the need to maintain separation (an information barrier) between investment bankers and brokerage firms, to limit the conflict of interest between the two. The first use of Chinese Wall in the general context of keeping confidentiality is unclear.
chinese wall - Investment & Finance Definition
The separation that should exist between a bank’s investment banking department and its research department. The separation is intended to protect research analysts who issue reports about companies’ financial situations from being influenced by investment bankers who are trying to sell merger advisory services or capital raising services to those same companies. As the stock market fell after record gains in 2000, and regulators began looking at conflicts between investment banking and research, it became apparent that the Chinese Wall had developed some gaping holes.