Which Act was created to address the need for oversight in the wake of corporate financial scandals?

The Sarbanes-Oxley Act of 2002 was established in response to significant corporate financial scandals, such as those involving Enron and WorldCom, which revealed severe deficiencies in financial reporting and corporate governance. The act aims to enhance accountability and transparency in publicly traded companies by implementing stricter regulations on financial disclosures and creating more robust oversight mechanisms. It introduced requirements for increased accuracy in financial reporting, established the Public Company Accounting Oversight Board (PCAOB) to oversee the audits of public companies, and mandated higher standards of corporate governance.

This legislative response reflects the urgent need for reforms to protect investors and restore public confidence in the integrity of financial markets, making it critical in preserving the integrity of financial systems. The focus of the Sarbanes-Oxley Act on corporate accountability particularly distinguishes it from the other options, which address different regulatory needs and contexts.