What was the primary motivation behind the creation of the Sarbanes-Oxley Act of 2002?

The Sarbanes-Oxley Act of 2002 was primarily motivated by the need to restore public confidence in the financial markets following a series of high-profile corporate scandals, most notably the collapse of Enron. Enron's bankruptcy was a pivotal moment that exposed significant shortcomings in corporate governance, accounting practices, and regulatory oversight. The failures at Enron and similar companies highlighted the necessity for stronger regulations to protect investors and ensure the integrity of financial reporting.

The Act introduced rigorous reforms aimed at increasing transparency in financial reporting, enhancing the accuracy of corporate disclosures, and establishing more stringent penalties for fraudulent financial activity. These measures were intended to prevent future corporate fraud and protect investors, ultimately fostering a healthier business environment and restoring trust in publicly traded companies.

In contrast, while increasing company profits, regulating insider trading, and limiting investor lawsuits may address various aspects of corporate law and governance, they were not the central motivations or focal points of the Sarbanes-Oxley Act. The legislation was specifically aimed at preventing the type of financial misconduct that led to events like the Enron debacle, making this the correct choice in understanding the roots of the Act.