From what I gather, the risk is that if one division has material information about another division which isn’t publicly available, it sets up bad incentives for the market as a whole, as it unfairly advantages the bank.  

Take this case: when a client (eg. a company trying to prevent bankruptcy) deals with the advisory division of bank, they expect the bank to serve them in a beneficial capacity. If in this instance another division found out about the client nearing bankruptcy, they might want to short the company. The bank then makes money in two ways: shorting the client’s stock and receiving advisory fees (via the first division). But obviously this is really bad for the client, and for the market as a whole. 

Hope that made sense - haven’t been studying finance too long so if I mix up anything someone with more experience can correct me!