What act was passed in 2002 to protect investors from fraudulent accounting activities by corporations?

The Sarbanes-Oxley Act (SOX) was enacted in 2002 in response to major corporate and accounting scandals, such as those involving Enron and WorldCom. This legislation aims to enhance financial disclosures from corporations and prevent accounting fraud. It established stricter regulations on how companies report their financial information and increased penalties for fraudulent financial activities. Key provisions include the establishment of the Public Company Accounting Oversight Board (PCAOB), stricter requirements for financial record keeping, and increased accountability for corporate executives regarding the accuracy of financial statements.

The Sarbanes-Oxley Act fundamentally changed the landscape of corporate governance and financial practices, thereby restoring investor confidence in the financial markets by ensuring that companies are held accountable for their financial reporting. This significance makes it the correct answer in the context of protecting investors against fraudulent accounting activities.