"An internal '
wall' between two
departments of a
bank of other
financial institution which is meant to ensure that
conflict of interest do not
arise and, in particular, there there is no
inside dealing in the
shares of a
client.
For instance, a bank might have a corporate finance department which advises on takeovers and mergers, and a fund management division which invests client money in shares. If the fund managers were to hear in the canteen about an impending deal, that would be insider dealing. Chinese walls, 'enforced by a bank's compliance department, are meant to ensure that the corporate financiers don't talk to the fund managers about their work."
taken from Finance-glossary.com