I think we need to ask some serious questions about the whole small cap market because I really don't see how the economics of this can ever stack up from now on, unless you have a monster business opportunity to begin with.

To get a listing, the company needs to do an IPO - this is a costly operation. Then it needs to comply with the reporting/auditing rules - this has an annual price tag of up to $1m, so the business needs to make that just to break even - so probably needs to T/O $10m just to stay afloat @ a net margin of 10%.

Then more capital may be needed to fund the early years and for growth. Given the demise of investment banking, the only game left is toxic financing, which eats the original shareholders' equity month by month, as the value of the company moves from equity to the secured creditors.

Your shares are now played with by the pump 'n dumpers who make money either way, aided and abetted by the likes of the Madoff manipulators. As we've seen from FMDAY, this has nothing to do with the underlying business - but with double digital gains on the pumps, this sucks in small shareholders in the hope of greater returns than they'd get from large, establised businesses.

Then with diffuse shareholding - like that here for example - managements are only really accountable to the toxic financiers, who have a vested interest in seeing the equity debased so giving them a bigger share of the remaining value. Managers therefore play extremely short term and line their own pockets while they can - the exact opposite of what small cap start ups should be doing.

If things go well, well maybe someone makes some money, but in many cases after a R/S, the equity is bombed out and the small shareholders are left with less than 1% of their money - so they give up and walk away.

Becoming a PLC is seen as "having made it" by the owners of small private companies - they see it as gaining status, being personally successful, but the truth is that going public is the first step down the road towards going into administration. The only people who make any real dough are the IPO outfits, the toxic financiers and the managers who fleece the shareholders for a couple of years, if they can.

Meanwile the toxic financiers have got their high interest return on their loans, secured on what's left of the underlying business and by careful timing of when they finally fold it, they can offset the writedown against tax liabilities elsewhere.

The do-called "junior" markets were supposed to be the seedbed for new businesses to grow - all they have produced is a sea of weeds. Light touch regulation is no regulation, and the wolves know where they can get an easy meal.