What is incredible to me is how brazen the frauds have been. Where are the regulators? Clearly there is little due diligence being performed by the stock exchanges or the US Securities and Exchange Commission (SEC). This is the downside to the theory that free market capitalism will self regulate. Free markets will self regulate - in the long run. But, many folks may get hurt in the short run.
We must remind ourselves, that just because a stock trades on NASDAQ or the New York Stock Exchange does not mean it has anyone's seal of approval. Investing in any company requires looking at the financial statements and making sure the auditor's report states that the financial statements can be relied upon. Also, the auditor should be well-known. After all, even Bernie Madoff had a clean auditor's report. However, Madoff's auditor was a one-man firm not even located in New York City. Click here to see a list of large, reputable audit firms.
The lesson here is that investing in so-called "emerging markets" is best left to professionals. Also, I should point out that the diversification benefits of emerging market stocks on a well diversified portfolio are small and can be outweighed by the expenses, complexity, and risks involved.