Why did Congress pass the Sarbanes-Oxley Act of 2002?

The main
reason why Congress passed this law was the wave of scandals that had to do with the way that
companies kept their books.  The most famous of these scandals was the one involving the Enron
company.  Most of these scandals involved companies claiming, in essence, to have more money
than they really did.

The problem, as Congress saw it, was that the
accounting firms were not being required to keep the books in an accurate way.  There were too
many loopholes open that allowed them to provide figures that made the companies look stronger
than they actually were.  These figures misled investors and encouraged them to invest in
companies that really were not very financially sound.