What is the significance of the Sarbanes-Oxley Act on Wall Street?

The Sarbanes-Oxley Act (SOX) of 2002 was passed by the US Congress in response to accounting scandals such as Enron and WorldCom that shook the financial world and eroded investor confidence. The act was named after its sponsors, Senator Paul Sarbanes and Representative Michael Oxley, and it introduced sweeping changes to the way public companies and accounting firms conduct their business.

The SOX Act established new or enhanced standards for corporate accountability, financial disclosures, and internal controls, among others. It required CEOs and CFOs to certify the accuracy of their companies' financial statements and disclosures, and created the Public Company Accounting Oversight Board (PCAOB) to oversee the audits and practices of accounting firms that audit public companies.

The Sarbanes-Oxley Act has had a profound impact on Wall Street and the financial industry. It has brought greater transparency and integrity to financial reporting, improving investor confidence and protecting investors from corporate fraud and scandals. It has also increased the cost of compliance for companies and accounting firms, and some critics argue that it has made the US capital markets less competitive compared to other countries with less stringent regulatory regimes.