What does the Sarbanes-Oxley Act of 2002 prohibit?

The Sarbanes-Oxley Act of 2002 was enacted primarily to enhance corporate accountability and to protect investors by improving the accuracy and reliability of corporate disclosures. One of its key provisions prohibits knowingly false filings with the Securities and Exchange Commission (SEC). This means that executives must ensure that the financial statements and disclosures they submit to the SEC are truthful and accurate.

Additionally, the act includes measures against improper financial reporting during blackout periods, which are times when employees are prohibited from trading company stock. The intent is to prevent corporate executives from manipulating financial information or taking advantage of non-public information during such periods. Thus, the essence of the correct answer aligns with the act's goals of preventing dishonesty and ensuring transparency in corporate finance, contributing significantly to corporate governance reform.

The other options do not accurately reflect the core prohibitions under the Sarbanes-Oxley Act. Unlimited shareholder liability is not a feature of the act; corporate structures typically limit shareholder liability. Furthermore, directors are not generally prohibited from making business decisions under the Sarbanes-Oxley Act, as it focuses more on accountability and transparency rather than restricting decision-making. Lastly, the act applies to all publicly traded companies, and not just private entities, making it clear that