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.
I would recommend folks own a low-cost international index fund that invests in stocks from all over the world (but outside of the US). One of the best and lowest cost is the Vanguard Total International Stock Index Fund. You'll notice that this fund currently allocates 23% of its assets to emerging markets. Of this 23%, roughly 10% is allocated to the biggest emerging market countries commonly referred to as the BRICs (Brazil, Russia, India, and China).
You can read My 3 Rules for Foreign Stock Investing by clicking here. The most important rule is that a little foreign equity goes a long way in diversifying your portfolio. An allocation of no more than 10-20% of your portfolio to foreign equity will optimize your risk vs. return trade off.