The Capital Market

4. What are three primary roles of the U.S. Securities and Exchange Commission (SEC)? How does the Sarbanes-Oxley Act of 2002 augment the SEC’s role in managing financial governance? Do you think that businesses became more ethical after Sarbanes-Oxley was passed? Provide examples to support your answer.

The U.S Securities and Exchange Commission has the role of protecting the investors, maintaining fair orderly and efficient markets and finally facilitates the capital formation. ‘The Sarbanes- Oxy act requires the SEC to be able to conduct a study on financial adoption system of reporting which is a principle based accounting system’ (Wolf, 2005, p.109). This has the advantage of protecting investors in the USA from some of the big company collapses that happened as early as 2000. The SOX a timely solution for the people and companies, it was able to eliminate a number of conflicts of interest and established a self defensive checks and balances to work as they were supposed to have been working. This created room for the development of the private sector, the nonprofit corporation, public companies accounting oversight boards whose role was that they were to oversee the accountants of public companies.

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