Series 79 practice questioneasyChinese Walls / Information Barriers
Which action is a key component of an effective information barrier in an investment bank?
- AAllowing unrestricted email communication between research and investment banking
- BPhysically separating investment banking and trading staff✓ Correct answer
- CRequiring traders to report all phone calls
- DPosting deal information on the company's intranet
Explanation
Why B — Physically separating investment banking and trading staff
Physical separation is a clear method to enforce information barriers and limit unintentional information flow. The trap is thinking monitoring or sharing information is sufficient without physical or procedural barriers.
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