What is the purpose of the Sarbanes-Oxley Act?

The Sarbanes-Oxley Act was enacted in 2002 in response to financial scandals that shook investor confidence and highlighted significant failures in corporate governance and accountability. The primary purpose of this legislation is to protect investors by enhancing the accuracy and reliability of corporate disclosures made under securities laws.

To achieve this, the Act imposes strict regulations on publicly traded companies, requiring them to adhere to more robust financial reporting standards and internal controls. It mandates that senior executives take personal responsibility for the accuracy of financial statements, providing a clear incentive for companies to maintain integrity in their financial reporting practices. The implementation of these measures aims to prevent fraudulent activities and ensure that shareholders receive transparent and truthful information about a company's financial health, thereby fostering a fair investment environment.

The other options address different areas, such as data encryption, cybersecurity, and e-commerce regulations, but none are directly related to the specific aims of the Sarbanes-Oxley Act.