There are companies that have been known to cook the books. Therefore, as an investor, you will have to do your homework before investing. Most companies are honest and will not take any risks since the shareholders can sue the company for fraud. Furthermore, the reputation of the top corporate leaders, C-suite executives, will be tarnished in the process.
This is where many investors will do the research on the C-suite executives. To verify the C-suite executives integrity and knowledge in the industry they are competing in. Hunter Harrison is a legend in the railway industry known to turn around struggling railway companies. He is worth the $50 million plus yearly salary.
Therefore, a successful company will need an excellent team of C-suite executives. Their vision, direction, experience and knowledge can determine the fate of the company.
The one basic rule I go by is this. If it sounds too good to be true, it probably is.
Google is also good for finding reviews on investment opportunities. I will put the word scam after the name to see if anything pops up in Google.
Muddy waters research uncovers scam companies. When muddy waters is on the news with a new scam company being targeted, sell immediately.