Firms may create information walls whenever there is the risk that material, non-public information (MNPI)/inside information will be transmitted between employees, such as between analysts and a trading desk, or analysts engaging in private transactions involving publicly traded companies.

This should additionally be emphasized through a firm’s training program, for example one not using any such information in shared or public spaces.

For example, suppose an investment firm consists of analysts who focus on private transactions and analysts engaged in publicly traded securities.  A third party approaches the investment firm and asks the private transaction analysts to consider participating in a specific transaction that has yet to be announced.  Knowledge about this unannounced transaction would constitute MNPI/inside information, and the investment firm’s private transaction employees (and compliance professionals) should be careful that such information does not reach their public securities-focused colleagues.  Informational walls or silos between departments help reduce the risk of MNPI/inside information reaching employees who are not supposed to have such information and who could trade based on that information.

Firms should create appropriate policies if they are disclosing market participants or market sounding recipients in relation to any inside information disclosed or received in connection with a market sounding to which the Market Abuse Regulation applies.  For more on this, see here.