CFA Level I · CFA Level I Exam · Guidance for Standard II: Integrity of Capital Markets
A firm's compliance policy states that its investment banking and research departments must be separated so that material nonpublic information held by one cannot reach the other. This control is best described as:
The control is an information barrier, also called a firewall. It separates departments so that material nonpublic information held by one, such as investment banking, does not pass to another, such as research or trading, helping the firm comply with Standard II(A).
- Aan information barrier.Correct
- Ba quiet period.
- Ca soft dollar arrangement.
Explanation
A firewall or information barrier separates departments so that material nonpublic information is not shared, supporting compliance with Standard II(A). The other terms describe different practices unrelated to preventing information flow.
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