Introduction
The Securities and Exchange Commission has put American banks under tight scrutiny since 2012 when JPMorgan’s was involved in the provision of false information concerning the trade losses it incurred during the first quarter of the year. From then on, institutions like Bank of America have strived to put their house in order to prevent such gambles in the future.
Prevention of high-risk gambles in securities/banking
The Security Exchange Commission in the USA is responsible for supervising the activities of professionals who render financial services to their consumers or clients and mutual fund trading to avert fraud and deliberate deceit. It contributes to openness to the activities of U.S. companies to allow potential and existing investors to obtain correct information regarding their validity. This regulation eventually prevents abrupt changes in the stock market due to unavailable or undisclosed information. This further safeguards investors when buying stock and mutual funds.
The Security Exchange Commission under the Security Act of 1933 and the Security Exchange Act of 1934 has put in place policies and rules that guide the sector. According to the acts, all investors have the right to get information about an investment before making a decision to venture into it. All public companies are required under the laws to provide their correct financial information for scrutiny by the investors. This reveals useful information about the market and prevents fraud that might occur due to some undeclared information. The commission also regulates the environment under which trading occurs by making sure that all the parties involved are aware of the obligations and rules that they are required to follow.
The commission enforces the above laws against those who flout them by using civil or administrative actions. When the commission finds out the misconduct of a party, it may decide to file a complaint and ask the court for approval. The commission could also forward the case to an administrative law judge.
Elements of a valid contract between banks and customers
The elements of a valid contract between banks and their customers vary according to the context of the contract. This contains details of the first and basic agreements between the parties involved. There is also the element of duty of good faith and fair dealing, which means that it is the responsibility of each party to be committed fully to the contract. There could also be a contravention of the contract whereby one party fails to perform its part of the bargain as earlier agreed. This may lead to interference with the other party as it may have adverse effects on its expectations and performance. There could also be damages on one party’s properties due to the conduct of the other party. This could result in one party demanding payment of the damages caused.
Banks and their customers should endeavor to have honesty while conducting their businesses and transactions. The expectations of both parties should play a big role as this makes the basis of their preliminary agreement. There could always be frictions, which may end up in a court of law in cases where the bank or the customer feels that the opposite party has not met their expectations. For the two parties to work in harmony there should be no compromise on another party’s rights since the agreement clearly indicates each party’s rights. The two parties should work together with diligence towards the basic goal of fulfilling their initial agreement.
Intentional and negligent tort actions
An intentional tort is committed when one party injures another or destroys their property knowingly. One party not being able to avert a situation that may be detrimental to another party or individual contributes to negligent tort. Negligence occurs in a case where one party goes against the obligation of taking care of the other party. This could result in one party suffering property damages due to the other party’s negligence (Cheeseman, 2010).
The difference between intentional and negligent torts could be determined by examining the state of mind of the party that has committed the offense to validate if there was any huge risk expected. Examples of intentional tort may include the forging of documents and using them for personal benefits. The offender could sometimes intentionally ask for compensation for services not rendered. Negligent tort could be due to a professional accepting so many clients or customers and is not able to provide quality service to them considering their numbers.
Interference with a contractual relationship and breach of fiduciary duty
A fiduciary relationship between two parties occurs when one of the parties is under the obligation to offer direction to the advantage of the other party in relation to the parties’ contract. Loyalty is one of the elements that drive a contractual relationship between two parties. This involves the willingness and devotion of both parties to a particular cause. Fiduciary duties are in many cases intended to prevent parties from being unfaithful to each other in terms of the contractual relationship (Bagley, 2013).
When one party disregards the relationship, then there is a breach of fiduciary duty. The breach could be in terms of one party involving itself in activities that are self-beneficial at the expense of the other party. For instance, a bank may not properly analyze the frictions that may arise between activities done on its behalf by its agents and the resulting effects on its customers as a third party in the agreement. In this case, there is a need for the agent to exercise discretion as it is acting on behalf of the bank and considering the customer as a third party beneficiary.
When Bank of America involves itself in the above breach of fiduciary duties, then a good percentage of its customers would lose faith in it for fear of losing their money especially in terms of deposits. As a result, the bank would end up losing its customers and more so investors.
Mobile banking and online transactions
Mobile banking and online transactions have been on the rise recently due to the urge to have a cashless world. This has necessitated the need to protect online transactions from fraud. Banks have put in place various ways of protecting themselves and their clients from malpractices by improving on their verification of account activities online. This means that one is able to verify online whether any transaction done on his or her account is valid or is a fraud.
There has been an application of security technologies that prevent computer viruses from getting into the banks’ networks using antivirus. One of the strategies would be deploying strict security rules at all levels and securing the bank’s network ((Mann, 2012). When an individual tries to gain access to one’s accounts or the bank’s network, then firewalls block them. This means that the individual has to go through an authentication process before gaining access. There has also been an application of data integrity procedures that ensures no individual interferes with the information relayed during the transfer process.
References
Mann, Ian. (2012). Hacking the Human: Social Engineering Techniques and Security Countermeasures. Aldershot: Gower Publishing.
Cheeseman, R. (2010). The Legal Environment of Business and Online Commerce: Business Ethics, E-Commerce, regulatory, and International Issue (2nd ed.). University of South Carolina, USA: Prentice Hall.
Bagley, C. E. (2013). Managers and the legal environment (7th ed.). Mason, OH: South-Western Cengage Learning.