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Introduction
JP Morgan Chase & Company is the largest bank in the United States that offers banking and other financial services. It has a market capitalization of approximately $2.145 trillion. It was founded in 2000 after the merger of two financial institutions namely J.P. Morgan & Co. and Chase Manhattan Corporation. Financial experts have severally criticized the bank for its involvement in unethical financial activities. For instance, in 2012, the bank was accused for intentionally excluding a $4.4 billion trading loss from the annual financial report. The losses had originated from bad investment decisions made by the Chief Investment Officer (CIO). In 2013, the financial institution agreed to pay more than $920 million in fines for the losses incurred due to severe violation of trading regulations. The bank had violated several American Securities laws and market regulations.
The Administrative Agency Role
Administrative agencies use several approaches to prevent fraud, manipulation of financial markets, and high-risk gambles in securities by financial traders. The Securities and Exchange Commission (SEC) maintains fair and orderly financial practices. The commission’s regulations require all businesses to divulge information regarding the securities they trade in (Jennings, 2014). This enables investors make informed financial decisions.
In addition, SEC oversees the activities of individuals who trade in securities such as financial dealers, brokers, mutual funds, and financial advisors. The commission sues any individual or group that violates securities laws. In addition, it interprets and enforces federal laws that govern securities trading, makes amendments to existing laws, and inspects securities firms and brokers to ensure that they follow laws of trading (Jennings, 2014).
The U.S. Commodity Futures Trading Commission (CFTC) regulates the financial markets that deal with options and product futures. Its main role is to protect investors from financial fraud, manipulation, unethical financial practices, and financial risk associated with derivatives (Jennings, 2014). In addition, it promotes transparent and ethical practices in financial markets.
Elements of a Valid Contract
The main elements of a valid contract include offer, acceptance, intention of legal consequences, and consideration (Jennings, 2014). A contract must contain an offer in which one party agrees to do something for the other. A valid contract must also include acceptance in which one party accepts the services that the other party offers. A contract is only valid if both parties enter into a legal agreement to fulfill the needs of each other. In addition, a valid contract must have a clause for compensation for services offered. Other elements include competency of parties, free consent, and legal formalities (Jennings, 2014).
Intentional and Negligent Tort Actions
Intentional torts are acts committed in order to harm an individual or their property (Walston-Dunham, 2011). These torts involve deliberate actions that are committed in order to cause harm. Examples include battery, false imprisonment, trespassing, and assault (Bagley, 2013). In contrast, negligent torts comprise acts that involve failure to rectify a problem that ends up harming other people. Negligent torts involve situations in which an individual harms another unintentionally through their failure to take action and avert harm (Bagley, 2013). The injuries caused by both intentional and negligent torts are usually similar. However, the punishment meted depends on the intention to cause harm. The two torts are punishable by law. However, their punishments vary.
Tort Actions
The elements of intentional interference with contractual relations include damage, disruption of contract, defendant’s knowledge of the contract, a valid contract, and deliberate actions intended to interfere with the contract (Walston-Dunham, 2011). A breach of fiduciary duty involves violation of duties owed to employers or principals by individuals in positions of trust or fiduciary relationship. In order for a claimant to prevail in such a case, it is imperative to prove that the defendant was in a position of fiduciary relationship but breached their duty in order to gain personal benefits (Walston-Dunham, 2011).
In the case of JP Morgan Chase & Co., the ban had a fiduciary duty of loyalty and care. The bank should have acted in the best interest of its clients and shareholders in order to avoid losses. A fiduciary that acts imprecisely is liable for any losses that originate from reckless actions (Walston-Dunham, 2011). Therefore, JP Morgan Chase & Co. was responsible for the losses incurred due to bad investment decisions. In the case of interfering with contractual relations, the bank could only be liable only if a valid contract existed and there was evidence of the bank’s intention to disrupt the contract.
Mobile Banking Security
Safety of customer information is one of the most important aspects of online banking. Security is important because of the need to avoid unauthorized access of customer accounts. Protection of customer information is one of the most important aspects of mobile banking. Banks have developed two strategies to protect software used for online banking transactions. These methods include the Personal Identification Number (PIN)/Transaction Authentication Number (TAN) system and signature based banking (Kondabagil, 2007). The PIN/TAN system involves the use of a special PIN that customers use to log in to their online accounts. In most cases, the PIN only applies once to lower the risk of fraud or hacking. A TAN is very secure because it prevents unauthorized access to customers’ online accounts.
TANs are used to authorize financial transactions (Kondabagil, 2007). Financial institutions replaced the initial single-password authentication system after the advent of online banking. TANs are secure because they require a password and login data in order to access an account. In case the document containing a TAN is lost, another person cannot use the information to access the account because additional is required to log in (Kondabagil, 2007).
Conversely, if an individual accesses a customer’s login data, they cannot transact without a TAN. On the other hand, they reduce the likelihood of phishing. The PIN/TAN system is safe and secure because it involves access of online accounts through Secure Sockets Layer (SSL) secured connections (Kondabagil, 2007). Therefore, additional encryption is unnecessary. Another method used to improve security is signature based banking. This method involves the digital singing and encryption of all financial transactions (Kondabagil, 2007). It uses special keys that are important for generation of signature and encryption data.
Conclusion
JP Morgan Chase & Co. is the largest bank in the United States that offers banking and other financial services. In 2012, the bank was accused of intentionally excluding $4.4 billion trading losses from its financial reports. In order to avoid such occurrences, administrative agencies such as SEC and CFTC implement securities laws and protect investors from fraud and manipulation. They draft and amend securities laws that promote transparent financial trading.
The main elements of a valid contract include offer, acceptance, intention of legal consequences, and consideration. Intentional torts are acts committed in order to harm an individual or their property. These torts involve deliberate actions that are committed in order to cause harm. In contrast, negligent torts comprise acts that involve failure to rectify a problem that harms other people. In order to improve security in online banking, banks use two main systems to protect software used for online banking transactions. These two methods include the PIN/TAN system and signature based banking.
References
Bagley, C. E. (2013). Managers and the legal environment (7th ed.). Mason, OH: South-Western Cengage Learning. Web.
Jennings, M. (2014). Business: Its Legal, Ethical, and Global Environment. New York: Cengage Learning. Web.
Kondabagil, J. (2007). Risk Management in Electronic Banking: Concepts and Best Practices. New York: John Wiley & Sons. Web.
Walston-Dunham, B. (2011). Introduction to Law. New York: Cengage Learning. Web.
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