Question 21

The Securities Act of 1934 established the Securities and Exchange Commission (SEC).

This legislation was pivotal in creating the SEC to regulate the securities industry and protect investors following the stock market crash of 1929.

A) The Securities Act of 1934

This option is correct because the Securities Act of 1934 was specifically designed to establish the SEC, which oversees securities markets and protects investors by enforcing securities laws.

B) The Glass-Steagall Act

This option is incorrect as the Glass-Steagall Act primarily focused on separating commercial banking from investment banking to reduce risks in the banking sector, and it did not create the SEC.

C) The Dodd-Frank Act

This option is also incorrect. While the Dodd-Frank Act made significant reforms to financial regulation after the 2008 financial crisis, it did not establish the SEC; the SEC was created much earlier in 1934.

D) The Sarbanes-Oxley Act

This option is incorrect as well. The Sarbanes-Oxley Act was enacted in 2002 to enhance corporate governance and accountability, but it did not establish the SEC, which was already in existence.

Conclusion

The Securities Act of 1934 is definitively the correct answer as it established the SEC to regulate the securities industry. All other options refer to legislation that, while important in their respective contexts, did not create the SEC or serve the same purpose in regulating securities.