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How to effectively implement operational separation in an integrated financial services enterprise

Author

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  • Dirk Peterson, C

Abstract

The US federal securities laws require broker-dealers and investment advisers to protect the flow of material, non-public information (MNPI) to prevent violations of the securities laws. Barriers are an integral part of the compliance programme at large diversified financial organisations. In addition to addressing issues of insider trading or front-running, each a form of fraud prohibited by the anti-fraud provisions of the US federal securities laws, information barriers also perform operational functions to separate affiliates and business units as a demonstration of independent uncoordinated investment control or power. Separation demonstrates that each affiliate or business unit operates independently to permit disaggregating investment holdings or transactions that might otherwise be prohibited. This paper addresses certain of the operational benefits of information barriers outside of their customary uses for the protection of material, MNPI.

Suggested Citation

  • Dirk Peterson, C, 2019. "How to effectively implement operational separation in an integrated financial services enterprise," Journal of Financial Compliance, Henry Stewart Publications, vol. 2(4), pages 371-379, June.
    • Handle: RePEc:aza:jfc000:y:2019:v:2:i:4:p:371-379
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    More about this item

    Keywords

    information barriers; material; non-public information; Securities and Exchange Commission (SEC) regulation;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • K2 - Law and Economics - - Regulation and Business Law

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