4 ms·

Ya, maintaining the Chinese wall between research and investment banking is a pretty central function of compliance and is regularly audited by the SEC.

Retric 10y ago
The last few decades demonstrate the SEC is much closer to a rubber stamp for bad behavior than a meaningful entity.
jsprogrammer 10y ago
What do Chinese have to do with the SEC? Answers are more helpful than downmods.
- _asummers 10y ago
  From Wikipedia[0]: > Chinese wall is a business term describing an information barrier within an organization that was erected to prevent exchanges or communication that could lead to conflicts of interest. For example, a Chinese wall may be erected to separate and isolate people who make investments from those who are privy to confidential information that could influence the investment decisions. Firms are generally required by law to safeguard insider information and ensure that improper trading does not occur. ... > The origin of the phrase is the Great Wall of China. [0] https://en.wikipedia.org/wiki/Chinese_wall https://en.wikipedia.org/wiki/Chinese_wall
  - jsprogrammer 10y ago
    Yeah, I didn't see anything about SEC in there. That page also quotes a California Superior Court opinion that found the term was a "piece of legal flotsam which should be emphatically abandoned". The same opinion also found: > The origin of the use of "Chinese Wall" in the context of confidentiality is unclear. Evidently, the term was casually coined in some appellate opinion, then picked up and used without question or explanation by courts and commentators. Can you point to an SEC regulation, or other law, that refers to a Chinese Wall? Like, is there a more specific, technical definition? Wikipedia refers to Chinese wall departments in companies; do you know where to find more information about them? Perhaps links to their enforcement and compliance documents?
    - azernik 10y ago
      You're taking that quote WAY out of context. That was an ethnic-Chinese judge criticizing the specific phrase, and preferring that "ethics wall" be used instead. 'He maintained that the "continued use of the term would be insensitive to the ethnic identity of the many persons of Chinese descent"' The article mentions, but does not specifically name, regulations implemented after the 1929 stock crash; it also specifically names Title V of the Sarbanes-Oxley Act of 2002. The SEC is responsible for the enforcing the provisions of the latter.
      - jsprogrammer 10y ago
        The damning part is this: > then picked up and used without question or explanation by courts and commentators This indicates (and was also said) that the term has no lawful basis; it is industry cargo cultism that had been copied around without basis for years.
        azernik 10y ago
        It is an informal term that refers to very real regulatory requirements.
        jsprogrammer 10y ago
        I'm having trouble visualizing such a wall. Is a wall referenced? Or is just a metaphor for some vague rules that may or may not be followed? Is there a turnkey fire/Chinese wall product on the market?
        princeb 10y ago
        it works just like a industrial grade router firewall - the router is connected to a gas main, which directs a stream of gas over the back the of router where the rj45s go into, and a flame continuously burns any nasty hackers attempting to hack into your system. home router systems don't have such a feature. edit: matt levine used to work at goldman and he posted a piece that has a description of how goldman's multiple chinese wall systems works: > Nor will [the research analysts] get any hearty back-slaps and high-fives from the bankers, because any banker who walked onto a research floor would be vaporized by powerful lasers long before he could raise his hand for a high-five. > Remember, bankers can't just call up analysts. Their phones would explode. https://www.bloomberg.com/view/articles/2016-05-19/goldman-picked-a-good-time-to-like-tesla-s-stock https://www.bloomberg.com/view/articles/2016-05-19/goldman-p...

Retric 10y ago

The last few decades demonstrate the SEC is much closer to a rubber stamp for bad behavior than a meaningful entity.

jsprogrammer 10y ago

What do Chinese have to do with the SEC? Answers are more helpful than downmods.

_asummers 10y ago
From Wikipedia[0]: > Chinese wall is a business term describing an information barrier within an organization that was erected to prevent exchanges or communication that could lead to conflicts of interest. For example, a Chinese wall may be erected to separate and isolate people who make investments from those who are privy to confidential information that could influence the investment decisions. Firms are generally required by law to safeguard insider information and ensure that improper trading does not occur. ... > The origin of the phrase is the Great Wall of China. [0] https://en.wikipedia.org/wiki/Chinese_wall https://en.wikipedia.org/wiki/Chinese_wall
- jsprogrammer 10y ago
  Yeah, I didn't see anything about SEC in there. That page also quotes a California Superior Court opinion that found the term was a "piece of legal flotsam which should be emphatically abandoned". The same opinion also found: > The origin of the use of "Chinese Wall" in the context of confidentiality is unclear. Evidently, the term was casually coined in some appellate opinion, then picked up and used without question or explanation by courts and commentators. Can you point to an SEC regulation, or other law, that refers to a Chinese Wall? Like, is there a more specific, technical definition? Wikipedia refers to Chinese wall departments in companies; do you know where to find more information about them? Perhaps links to their enforcement and compliance documents?
  - azernik 10y ago
    You're taking that quote WAY out of context. That was an ethnic-Chinese judge criticizing the specific phrase, and preferring that "ethics wall" be used instead. 'He maintained that the "continued use of the term would be insensitive to the ethnic identity of the many persons of Chinese descent"' The article mentions, but does not specifically name, regulations implemented after the 1929 stock crash; it also specifically names Title V of the Sarbanes-Oxley Act of 2002. The SEC is responsible for the enforcing the provisions of the latter.
    - jsprogrammer 10y ago
      The damning part is this: > then picked up and used without question or explanation by courts and commentators This indicates (and was also said) that the term has no lawful basis; it is industry cargo cultism that had been copied around without basis for years.
      - azernik 10y ago
        It is an informal term that refers to very real regulatory requirements.
        jsprogrammer 10y ago
        I'm having trouble visualizing such a wall. Is a wall referenced? Or is just a metaphor for some vague rules that may or may not be followed? Is there a turnkey fire/Chinese wall product on the market?
        princeb 10y ago
        it works just like a industrial grade router firewall - the router is connected to a gas main, which directs a stream of gas over the back the of router where the rj45s go into, and a flame continuously burns any nasty hackers attempting to hack into your system. home router systems don't have such a feature. edit: matt levine used to work at goldman and he posted a piece that has a description of how goldman's multiple chinese wall systems works: > Nor will [the research analysts] get any hearty back-slaps and high-fives from the bankers, because any banker who walked onto a research floor would be vaporized by powerful lasers long before he could raise his hand for a high-five. > Remember, bankers can't just call up analysts. Their phones would explode. https://www.bloomberg.com/view/articles/2016-05-19/goldman-picked-a-good-time-to-like-tesla-s-stock https://www.bloomberg.com/view/articles/2016-05-19/goldman-p...