Series 79 practice questionmediumChinese Walls / Information Barriers
An investment bank’s control room is notified of an upcoming M&A deal. Which action best ensures effective implementation of information barriers?
- AAllowing deal team members to communicate with the research analysts about general industry trends
- BDistributing the deal memo to all investment banking staff
- CAdding the target company to the firm’s restricted list and restricting trading firm-wide✓ Correct answer
- DPermitting proprietary traders access to deal documents if they sign a confidentiality agreement
Explanation
Why C — Adding the target company to the firm’s restricted list and restricting trading firm-wide
Placing the target on the restricted list and restricting trading is standard for protecting MNPI and enforcing information barriers. The trap is thinking a confidentiality agreement alone is sufficient or that broad internal sharing is allowed.
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