Barchris Securities Regulation Standard Of Industry

The case Escott v. Barchris involves the standard of due diligence. In this case, underwriters are required to verify an issuer’s registration statement in a manner that is independent of the issuer. The Court ruled that underwriters have an obligation to act as an “adverse party” to the issuer during due diligence. Many courts have agreed with this position, and commentators have mostly ignored the conflict of interest between underwriters and issuers.

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