JPMorgan Chase Essay Example | Topics and Well Written Essays - 1250 words - 1

JPMorgan Chase - Essay Example However, losses also occur due to internal frauds and corruptions which lead to comparatively severe consequences. Due to this banking activities are administered by the security agencies like Security and Exchange Commission (SEC) and Commodities Futures Training Commission (CFTC). The prime responsibility of these security agencies is to look after the financial dealings within the banking sector and to investigate the losses and fraudulent activities. The summer of 2012 brought a very distinctive case forward in the history of financial gambling as a leading bank of United States of America was found to have a loss of $5.8 billion. The company officials reported that the loss occurred due to the poor investment decision made by the management with respect to trading. Later on this statement given to the CFTC inspectors was found to be false and the overall inspection showed some counter results. The bank officials working on trading investment left the bank soon after this event w hich raised a lot of questions to the investigating officers (Farrell, 2012). Role of SEC and CFTC in preventing high risk gambles When a bank or any other financial institution faces a loss due to gambling then the overall economy of the country has to bear its consequences since these two economic sectors act as the most significant structural blocks for any nation. In relation to this the role of SEC and CFTC also becomes substantial as they are the key forces behind the prevention of such activities. Their prime concern is to ensure that maximum protection is extended to the investors, rules are fairly followed by the banks, financial market is operating efficiently and lastly there is enough capital available to the banks and other financial institutions to carry on their activities (Schapiro, 2012). Among these the duty of protecting the investors safeguards high risk gambles. In addition to this, these agencies implement laws regarding the fraudulent activities reported by th e financial institutions. For instance, in the case of JP Morgan Chase the CFTC investigated the overall scenario and found that initial reporting made to the agency was falsified and that the real reasons behind the massive loss were in kept hidden by the Chief Investment Office (CIO). CFTC was responsible to look after trading and financial derivatives while on the other hand SEC supervised the bank’s financial disclosures from the stockholders so as to investigate the details of such a massive loss (Gary Shorter, 2012). Valid Contract Contracts are not just general agreements between two parties rather they are the legally supported documents which can be challenged in the court. The contracts are made to give legal assistance to an agreement so that in future if either of the parties commits an illegal activity then the other one can save itself from potential losses. Due to the legalities attached to contracts there are certain essential elements of a Valid Contract whic h makes it fully acceptable in courts and in legal institutions. Following are the essential elements of a Valid Contract (Elements of a Contract, 2013): Offer and Acceptance: First of all an offer is made by one of the parties which can be accepted or rejected by the second party. If the offer is accepted by the other party then the procedure moves on. The acceptance of the offer reflects the agreement of the other party regarding all the stated rules and regulations. Intention to build successful legal relations: A valid