July 2012, after one decade of the scandal ENRON and associates, the history was repeated, with one of the most prestigious banks, JPMorgan Chase had announced the losses of almost $ 5.8 billion from a dysfunctional trading operation, as a result of gambling with other people’s money, on Wall Street. JPMorgan’s report to the SEC that the bank recorded a $718 million loss from the London trades on its internal accounts, but did not report the loss in its first quarter earnings statement. Malicious act done with the falsification of its reports filed with the SEC, hiding large losses by declaring profit of $ 5 billion.
The damage caused by JPMorgan Chase ...view middle of the document...
The SEC is responsible for protecting U.S. investors from potential loss of income by maintaining fair and orderly practices to encourage capital markets. The commission requires businesses to disclose meaningful information about securities they sell, so that investors can make informed decisions.
The SEC also oversees participants in the securities world, including exchanges, brokers and dealers, financial advisers and mutual funds, and can bring civil suits against individuals or companies that break the securities laws. The commission is charged with interpreting federal securities laws, issuing new rules and amending existing rules, overseeing the inspection of securities firms, brokers, investment advisors and ratings agencies, maintaining private regulatory organizations in the securities, accounting and auditing fields, and coordinating U.S. securities regulation with federal, state, and foreign authorities.
The Wall Street Reform and Consumer Protection Act of 2010 (Propose by the CFTC) specifically prohibits a bank or institution that own a bank from engaging in proprietary trading that is not requested for its clients, reaching this prohibition the investing in fund or private equity fund and finally limit the liabilities that largest bank can hold.
2. Determine the elements of a valid contract and discuss how consumers and banks each
have a duty of good faith and fair dealing in the banking relationship.
By definition contract is a legally enforceable promise. In other words is an agreement
between two or more corporations or persons that will be enforced by the courts. The
creation of a contract involves meeting some requirements by law. Here the requirements
or elements of a contract:
a) Offer: the willingness to create a legal binding that will conclude in the rendering of a product or service for the recipient.
b) Acceptance: By the receiver and the offeror, both parties, to enter in agreement.
c) Consideration: The formation of the contract requires providing something of value, can be money, service or promise, to the promisor to do.
d) Capacity: Requires the understanding of both parties the natures and effect of the agreement.
e) Legality: All contracts must have a legal purpose, those contraire to the statute or public policy will be illegal.
Additionally, most of the types of contract must be in writing, for to be enforceable by
The law, but generally contracts must have all the above mentioned requirements, for to
be legally binding.
The duty of good faith and fair dealing is implied in every contract. The restatement
(Second) Contracts, Section 205 states: “Every contract imposes upon each party of
Good faith and obligation in its performance or enforcement”. The UCC sets forth the
Extent of that obligation depending on...