SIE practice questionhardInsider Trading - Chinese Walls
An investment bank’s research department obtains non-public information about a merger from its advisory department. If the information is shared and acted upon, which compliance protocol was breached?
- AShort position reporting
- BChinese wall procedures to prevent insider trading✓ Correct answer
- CCustomer privacy under Regulation S-P
- DTrade matching requirements
Explanation
Why B — Chinese wall procedures to prevent insider trading
Chinese wall (or information barrier) procedures are designed to prevent misuse of inside information within firms. Sharing and trading on such information is a serious breach. Short reporting, privacy, and trade matching are unrelated.
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