Carey Lai's Corner

A former lemonade stand entrepreneur turned Venture Capitalist

Chinese Wall: It failed!

OLYMPUS DIGITAL CAMERAIn business, people often use the term “Chinese Wall.”  If you’ve never heard of this before, the expression is often used when describing conflicts of interest.  For example, you might hear an Investment Banker say that they have a Chinese Wall between Sales & Trading and Investment Banking.  Why?  If traders knew that a big transaction was about to take place, they might be inclined to trade on that information, which would also be securities fraud.  In venture capital firms, I’ve heard the term thrown around when a venture capital firm has two or more investments in the same category, such as investing in two start-ups that directly compete w/ one another.  In that instance, a partner might say they have a Chinese Wall that protects either company from information leaks.

Having just celebrated Chinese New Year (the year of the Dragon), I’m reminded how it bothers me that people use the term “Chinese Wall.”  Why?  As a Chinese American, I don’t understand why people need to use the first word Chinese to describe a wall.  I totally get that the Chinese Wall is long and big.  But, do people realize the wall failed in its purpose, which was to keep the Northerners from attacking China?  Given that the wall failed, I think it’s a pretty bad expression when describing protecting people from conflicts of interest.  Instead, I’d rather hear people say they have a wall that protects all parties.  They could even say they have a BIG wall.

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This entry was posted on February 7, 2012 by in Uncategorized.
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