Due Diligence in SME Fundraising: Refom Choices, Economics and Emplncism

Proposals for the reform of disclosure rules applying when a small medium enterprise (SME) makes a primary offering of securities are analyzed. These proposals are criticized on different grounds, like the proposals assuming the value of coupling a due diligence requirement with in terrorem liability, rather than investigating the issue empirically and, the proposals do not ensure investors have adequate information to monitor and direct management after their investment is made.