What is ethical wall?

An ethical wall, also known as a Chinese wall or information barrier, is a system implemented in an organization to separate different departments or individuals that have conflicting interests or access to sensitive information. The wall is designed to prevent the exchange of information that could potentially result in conflicts of interest, insider trading or leaks of confidential information.

Ethical walls are typically used in the financial industry as a means of separating investment banking, research and trading departments. This ensures that confidential information about potential transactions remains secure and prevents insider trading. Law firms also use ethical walls to ensure that lawyers working on different cases do not exchange confidential information.

Ethical walls are usually enforced through a combination of physical and technological barriers such as access controls, passwords, and monitoring and auditing software. The implementation of ethical walls is often required by regulatory bodies and failure to comply can result in fines and legal action.