Why was the Sarbanes-Oxley Act enacted in 2002?

The Sarbanes-Oxley Act, enacted in 2002, was primarily designed to restore confidence in U.S. capital markets following a series of high-profile financial scandals, including those involving companies like Enron and WorldCom. These scandals revealed significant deficiencies in corporate governance, accounting practices, and financial reporting, leading to a loss of trust among investors and the public.

The Act introduced comprehensive reforms aimed at improving the accuracy and reliability of corporate disclosures, thus enhancing accountability for corporate executives and auditors. This was crucial for rebuilding investor confidence, as it established stricter regulations regarding financial reporting and established the Public Company Accounting Oversight Board (PCAOB) to oversee the audits of public companies. By addressing these issues, the Sarbanes-Oxley Act sought to protect investors and ensure the integrity of the financial markets.

In contrast, the other options do not align with the primary purpose of the Sarbanes-Oxley Act. Regulating international trade, promoting alternative energy sources, and supporting small businesses were not the main objectives of the legislation, which focused specifically on enhancing corporate governance and financial accountability within the realm of publicly traded companies.