Summary

Investment banks play a vital role in the American corporate system. They help firms acquire the capital they need to expand business operations. This expansion contributes to the growth in economic activity, wealth, and job creation in a capitalistic economy. However, capital is a scarce commodity. Not every person or firm that wants more money deserves to get it. Investment banks are the gatekeepers. They must be sure to conduct due diligence activities and only bring quality firms and security issues to the public. They have failed in recent years . While this chapter has detailed those failures, the next chapter discusses security analysts' failure. These issues are related , as analysts are frequently part of an investment bank.