The Securities and Exchange Commission has identified broker-dealer due diligence as an area of high risk. Before recommending any investment, a brokerage firm is required by law to have a reasonable basis for believing the investment is suitable for customers to whom the investment is recommended, and for understanding all the material facts (the pros and the cons) about the investment so that it can explain them to potential investors. The process by which the selling firm investigates a potential investment and learns the material facts about it is called due diligence. Due diligence is particularly important in recommending complex, non-publicly traded investments such as nontraded REITs.