What does "due diligence" mean for securities professionals?

"Due diligence" for securities professionals refers to the investigation and evaluation of securities offerings. This process is critical for ensuring that all relevant factors, risks, and potential returns associated with a security are thoroughly examined before making investment decisions or recommendations. It involves gathering extensive information about a company's financial health, management, market position, and the specifics of the securities being offered.

Conducting thorough due diligence helps to protect both the securities professional and their clients by ensuring compliance with regulatory requirements and reducing the risk of investment losses due to uninformed decisions. This concept emphasizes the importance of careful analysis and responsible decision-making in the securities industry, aligning with the duties of care and loyalty that professionals owe to their clients.