Question

Why was the Dodd Frank act necessary in addition to Sarbanes Oxley. What is the difference between the two legislations

Answer 1

The Dodd Frank Act was passed to enable significant reforms in the economy. Dodd Frank set up centralized exchanges for swap transactions to reduce the possibility of counterparty default. It also required a greater disclosure of swaps trading.

The Sarbanes Oxley Act was passed to ensure corporate transparency and a more reponsible use of resources. It protects investors against corporate and accounting fraud.

The difference between the two legislations lies in the purpose to enact them. The purpose of Dodd Frank is economic reform whereas the purpose of SOX is better accounting policies.