JPMorgan Chase. Chartered in 1799, JPMorgan Chase which began as The Manhattan Company was founded by Aaron Burr. Ranked number 16, JPMorgan Chase is a Fortune 500 company that offers financial solutions to clients in more than 100 countries. Having $2.5 trillion in assets and $108 million in revenue; JPMorgan Chase is the largest bank in the United States and has been in business for more than 200 years. Services provided by JPMorgan Chase are asset management, investment banking, private banking, treasury and security, and commercial banking. During the summer of 2012, the Security Exchange Commission (SEC) decided to investigate JPMorgan Chase after reports came out that a London-Based trader had been taking sizeable bets that distorted the market possibly causing the firm a $2 billion or more. JPMorgan Chase provided false reports about the trading loss stating that there were trading losses from investment decisions made by its Chief Investment Office (CIO) in the amount of $5.8 billion. On September 19, 2013, the Securities and Exchange Commission today charged JPMorgan Chase & Co. with misstating financial results and lacking effective internal controls to detect and prevent its traders from fraudulently overvaluing investments to conceal hundreds of millions of dollars in trading losses (U.S. Securities and Exchange Commission, 2013). JPMorgan Chase agreed to pay $200 million and admitted to the wrongdoings to settle charges with the SEC.
Security Exchange Commission (SEC). The SEC is defined as a U.S. government agency that oversees securities transactions, activities of financial professionals and mutual fund trading to prevent fraud and intentional deception (Rouse M. , 2008). The Security Exchange Commission (SEC) advocates and protects the investor, maintains market integrity, and facilitates capital formation. The SEC has a mission to protect all investors who invest to pay for such things as homes, college tuition, and retirement. All rules in the security industry are governed by a concept that says that all investors should be privileged to certain information about an investment before buying it and as long they are owners. In order to make this concept work the SEC makes public companies reveal financial and other information to everyone who is interested. This allows investors to decide if they want to buy, sell, or keep their stock.
The SEC’s main concern is to promote disclosure of market-related information, maintain fair dealing, and protection against fraud. The SEC does not manage the U.S. securities on its own. Together with Congress and other federal agencies the SEC manages and regulates the securities industry and the nation’s stock options and exchanges. In order to remain effective the SEC enforces its authority by bringing civil enforcement actions against companies and individuals for security law violations. The Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Sarbanes Oxley Act aid the SEC in managing the securities markets. The SEC prevents high risk gambles in the banking and securities foundation by creating and enforcing rules and trusting that the investors will bring enforcement actions against companies themselves.
Elements of a Valid Contract.
A Contract is an agreement with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit known as consideration (Farlex, Inc, 2013). When a valid contract is formed it consists of four basic elements: an agreement between both parties, promises supported by something of value, both parties having capacity to enter into a contract, and the contract has to have a legal purpose. All contracts are initially understood that they are negotiated under good faith and good dealing. In 2011, Brookstone Law filed a group tort lawsuit against JPMorgan Chase and others on behalf of 60 homeowners. It was alleged that the executives of these banks guided homeowners into bad adjustable rate or short term adjustable loans. This case was filed under the name of Potter vs. JPMorgan Chase. They were accused of targeting California with risky loans which caused homeowners to suffer. On November 19, 2013, it was announced that JPMorgan would pay a $13 billion dollar settlement for the wrongdoing in those and many other mortgages. $4 billion dollars of the settlement was allocated for consumer relief.
Differences between Intentional and Negligent Tort.
A tort is defined as a civil wrong doing resulting in injury brought to a person or property (Bagley, 2013). Tort cases are usually filed by someone who has been wronged intentional or not, looking to seek compensation. Torts may be intentional or negligent and either tort may result in harm.
An intentional tort is defined as a purposeful act committed by an individual by another person that results in the latter experiencing some type of harm (Intentional Tort, n.d.). Examples of intentional torts include: assault, battery, wrongful death, fraud, and trespassing on property all of these actions may be considered a crime. The elements of an intentional tort include the client has to proving actual or implied intent, a voluntary act by the defendant, causation, and injury or harm. Intentional torts are intended to protect people from physical and mental harm.
A negligent tort is a wrong that has resulted because of ones failure to adhere to the standard of care by required by law under the particular circumstances (Hernandez, 2010). The elements of a negligent tort that a client must prove is that there was a negligence in duty, breach in duty, causation, and resulting damages. Examples of a negligent tort can include: slips, falls, medical malpractice cases, and car accidents.
How Banks have Protected Software for Online and Mobile Banking. Online banking began in the 1980s when Citibank and Chase Manhattan offered banking services using electronic media. Customers that had a terminal, monitor, and a phone line were able to access their bank statements online. In 1994, as online banking improved after Stanford Credit Union developed the first modern style online banking services. Customers were then able to access their accounts any time of the day or night. As more people bought home computers and banks offered different banking services online banking became popular it was adopted across the world. Continuing to grow mobile online banking services available which were known as SMS banking. Smartphones and tablets have made mobile banking easier because of the apps that have been created for each bank. Online line banking has provided more opportunities for hackers to hack into accounts and steal money. One of the newer more common methods being used is called phishing. Phishing is defined as the act of sending an email to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft. The e-mail directs the user to visit a web site where they are asked to update personal information, such as passwords and credit card, social security, and bank account numbers that the legitimate organization already has. The Web site, however, is bogus and set up only to steal the user's information (Phising, 2013). Phishing has also been combined with different types of malware enabling the hacker to receive sensitive information or be alerted when the victim has logged into their bank account. In order to reach out and get victims false lotteries, Facebook ads, and real-estate ads have been used. In order to prevent the software that allows online banking banks have installed security systems such as multi-layer log on verification, encryption, digital certificates, and firewalls.
Multi-Layer Log on Verification- Allows the security system to authenticate your computer in order to ensure that the sign-in is not a fraudulent attempt to access your account information (Online Banking Security, 2013).
Encryption- Encryption software stops anyone from accessing your information when it passes between your computer and secure systems, you know you’re in a secure encrypted area when you see https in a web site address and the pad lock symbol appears in your status browser (HSBC-Online Banking, 2013).
Digital Certificates- A digital certificate is an electronic "passport" that allows a person, computer or organization to exchange information securely over the Internet using the public key infrastructure (PKI). A digital certificate may also be referred to as a public key certificate (Rouse M. , 2013).
Firewalls- A firewall is a system designed to prevent unauthorized access to or from a private network. You can implement a firewall in either hardware or software form, or a combination of both. Firewalls prevent unauthorized Internet users from accessing private networks connected to the Internet, especially intranets. All messages entering or leaving the intranet (i.e., the local network to which you are connected) must pass through the firewall, which examines each message and blocks those that do not meet the specified security criteria (Indiana University-Knowledge Base, 2013). Even though these systems are in place a true hacker looking to find a new victim always finds a loophole. Regardless of the security systems one always faces a risk when using the internet for banking and business transactions.