The Securities and Exchange Commission (SEC) works hard to prevent unscrupulous companies from "cooking" their books to paint investors and regulators a better financial picture than they really have. Yet, in the end, it is up to investors to research the companies in which they want to invest because __________ is the norm when investing in the stock market.

Question

Quizplus · Accepted Answer

Caveat emptor, or "buyer beware," is the Latin phrase used to describe the principle that the buyer alone is responsible for checking the quality and suitability of goods before making a purchase. In the stock market, investors should not rely solely on SEC regulations and financial statements, but also conduct their own due diligence and research before investing. This is because fraudulent activities can still occur despite regulations and companies can manipulate their financial statements in ways that may not be immediately obvious.

The Securities and Exchange Commission (SEC) Works Hard to Prevent