Wall That Keeps Conflicts Away
There is a moral barrier that is present between the members of the company where they are not supposed to communicate with each other in order to prevent any possibility of conflicts of interest. There have been disputes regarding this post as well. An example would be having a Chinese wall can be present between different sectors were exchanging information could lead to effecting the trades and it would be unfair. In the metamorphic sense, the wall is built to secure the inside information from being leaked and protecting private information which would lead to the creation of negative intimation and also lead to legitimate consequences if the data is shared in an inappropriate manner.
In every business protection of client information and confidential data is very crucial but it is even more important to protect this for companies that offer services that are diverse, like banks, insurance companies, and other financial institutions. The Glass-Steagall Act was revoked by the Act of 1999 known as the Gramm-Leach-Bliley Act. The Glass-Steagall Act put a prohibition on banks, insurance companies, and other financial institutions from behaving like a combined organization which means that a single organization could offer both bank facilities as well as insurance policies. As a result of the Gramm-Leach-Bliley Act, there was a rush of mergers and there was an increase in the more diverse types of services. Along with this, there was an increase in the public survey fears. However, there was one thing that was concerning that is protecting and sharing confidential data and personal customer details with those of opposing interests. Since this concern started increasing more and more as a response to it several firms started adoption of the concept of the Chinese Wall.
The name Chinese Wall was derived after the Great Wall of China which as we all know is impermeable ancient construct which is 5,500 miles in length and was constructed to provide protection to China from its enemies. When the stock market of U.S. crashed in the year 1929, this name came into existence. This market crash resulted it was suggested by the regulators to form a Chinese Walls between the investment bankers and brokers. There is pressure building up in order to control the industry therefore along with this a new legislation was passed. Hence, all the companies started to imposing a Chinese Wall concept by self-regulating in order to restrain the government from breaking apart their operations.