Selling lemons and Caveat Emptor
Hi friends,
There are two unrelated matters, under discussion of late, that bring up the question of what constitutes selling of lemons, or rather, mis-selling !
1) Tens of thousands of crores are pouring into mutual fund houses, and valuations are weird...advertising screams at you that it fine to invest in mutual funds , but do disclaimers in small print really work towards preventing ill informed investors from casually putting in hard -earned money into all kinds of schemes including NFOs being aggressively marketed by fat commission earners in the garb of "advisers" ? Does Caveat Emptor work here? Is a mutual fund a FMCG product that can be marketed based on perception manipulation?
2) Two leading pharma companies' long standing battle regarding the circumstances under which one bought the other's business has entered crucial stages of arbitration. It is the contention of one that the other suppressed vital information at the time of sale. What is the real scope of due diligence and what exactly is to be vetted by a due diligence provider? Warranties and disclaimers are aplenty, but is there more to these than meets the eye? What is the process control during due diligence and how much dependence can be placed on it? Does morality have a role in a M and A transaction? Does Caveat Emptor work here too ? While legal pundits will hammer out a solution surely, what are the generic lessons from this case?
There are two unrelated matters, under discussion of late, that bring up the question of what constitutes selling of lemons, or rather, mis-selling !
1) Tens of thousands of crores are pouring into mutual fund houses, and valuations are weird...advertising screams at you that it fine to invest in mutual funds , but do disclaimers in small print really work towards preventing ill informed investors from casually putting in hard -earned money into all kinds of schemes including NFOs being aggressively marketed by fat commission earners in the garb of "advisers" ? Does Caveat Emptor work here? Is a mutual fund a FMCG product that can be marketed based on perception manipulation?
2) Two leading pharma companies' long standing battle regarding the circumstances under which one bought the other's business has entered crucial stages of arbitration. It is the contention of one that the other suppressed vital information at the time of sale. What is the real scope of due diligence and what exactly is to be vetted by a due diligence provider? Warranties and disclaimers are aplenty, but is there more to these than meets the eye? What is the process control during due diligence and how much dependence can be placed on it? Does morality have a role in a M and A transaction? Does Caveat Emptor work here too ? While legal pundits will hammer out a solution surely, what are the generic lessons from this case?
posted by Kishkay,the cortex stimulator @ 11:22 PM
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