The legislation is pretty meaningless, but Sotheby's attorneys' response
does seem garbled. As they themselves state, buyers, unless total drop-ins,
are usually aware of the practice of pretend bids below the reserve. After
even a bit of auction experience bidders can easily figure out where the
reserve lies. The bottom line in the Anglo-American auction system is that
one either buys the lot at the reserve or competes with other bidders. If no
one wants to pay the reserve price, the lot is unsold. This is how auctions
work now, and the auctioneer's calling out below-reserve bids as
"consignor's bids" might enlighten a few newcomers but would not alter the
auction process.
How would the proposed legislation somehow cause "all prospective buyers
[to] know the seller's minimum price in advance"? Sotheby's excessively
strong (the word paranoid comes to mind) reaction to Brodsky's legislation
-- consignors will flee the NYC houses! - might risk adding fuel to the
eternally resurfacing assertion that the auction houses engage in deceptive
trade practices.
Nina Musinsky
Musinsky Rare Books, Inc.
176 West 87th Street
New York, NY 10024-2902
-----Original Message-----
From: Rare book and manuscripts [mailto:EXLIBRIS-L@LISTSERV.INDIANA.EDU] On
Behalf Of Michael Watson
Sent: Friday, August 17, 2007 7:04 PM
To: EXLIBRIS-L@LISTSERV.INDIANA.EDU
Subject: Re: [EXLIBRIS-L] NY Auction Bidding Legislation
A step in the right direction. It's a shame that it will be done one
state at a time, but I sure don't want to see a US federal law about
this: those fools won't get it right.
Will be very difficult to quantify and thus prove a violation of the
law. Perhaps the very existence of the law will deter a few folks,
especially since a violation of criminal law might be followed by a
civil suit if a monetary loss occurred.
Methinks Sotheby's doth protest too much and their arguments have no
logical basis. If they run an honest house, and I believe they do,
are they in any peril? Do they believe that the buyer doesn't think
the practice exists? Do they think they will lose business because
the law prohibits the practice? Do they really believe that New
York's auction trade will be curtailed by the buyer being protected
by law? Will the buyer illogically now trade where he/she is not
protected by law? Transparently a selfish wish to have the trade
unfettered. Arrogant idiots.
-Michael
At 12:18 AM 8/17/2007, you wrote:
>This article appeared recently in Maine Antiques Digest, August, 007.
--ECW
>
>http://www.maineantiquedigest.com/stories/index.html?id=88
>
>+++++++++++++++++
>
>Legislation in New York Aims to Forbid Chandelier Bids
>
>by Jessica Best and Betty Flood
>
> Sham or chandelier bids from auctioneers would be prohibited, unless
>the bids are identified with the phrase "for the consignor," under
>legislation introduced in both houses of the New York State Legislature.
>Also known as a "phantom" bid, a sham or chandelier bid is any bid
announced
>by the bid caller for which there is no bona fide offer or bidder. It is
>used by bid callers to keep the bidding alive and moving upward.
>
> "Sham bids create a false atmosphere of interest in offered work that
>may not actually exist and deprive the public of any real knowledge of the
>true level of interest for the work," said Senator John J. Flanagan
>(R-C-I-Suffolk), a co-sponsor.
>
> The legislation follows testimony claiming that the sham bids are
used
>by auction houses as a means of obtaining bids that meet and/or exceed the
>reserve price. "At legislative hearings, witnesses testified that sham
>bidding undermines confidence in the art market, and that such bids are
>deceptive and should be prohibited," said Flanagan. "Testimony was received
>that a sham or chandelier bid is not an ethical bid but is simply an
>inventive bid."
>
> Referring to the sham bids as "chicanery perpetrated by auction
>houses," Assemblyman Richard Brodsky (D-West-chester), a co-sponsor, said,
>"Acceptance of a sham bid by an auctioneer on behalf of an auction house is
>essentially a deceptive practice. There is no justifiable reason to permit
>the taking of fake bids without disclosure of this practice to the public.
>The theatrical benefits created by this practice are far outweighed by the
>public's right to be informed of the acceptance of such bids during the
>auction process. The marketplace has no need for such fraudulent and
>deceptive practices."
>
> In opposition, Sotheby's Holdings, Inc., one of the most prestigious
>art and auction houses in the world, has labeled the bill "unnecessary" and
>claims that it would regulate auction houses "in a manner that would almost
>certainly result in sellers electing to have their artworks and other items
>sold at auction in London, Paris, or other locations outside the United
>States."
>
> In a memo against the bill, Sotheby's stated: "In addition to
>adversely impacting the New York City auction market, this legislation also
>will negatively impact the hotels, restaurants, and retail markets that
>benefit from the national and international visitors who come to New York
>City to attend the premier auctions that take place at Sotheby's and its
>competitors.
>
> "This legislation appears to be based upon the erroneous theory that
>buyers at auction houses like Sotheby's are not aware of the fully
disclosed
>bidding practices that are utilized. In actuality, disclosure statements in
>auction house catalogs and other information plainly inform auction
>participants of the bidding methods. This includes notice of the existence
>of reserve bidding and guaranteed prices, when such methods are utilized."
>
> Sotheby's cites the Department of Consumer Affairs of the City of New
>York's regulations, which are applicable to all of Sotheby's auctions in
New
>York City and were developed in conjunction with the Association of the Bar
>of the City of New York's committee on art law. The regulations include
>provisions dealing with licensing, bonding, fingerprinting, and monitoring
>of auctioneers; auction house disclosure to the bidding public if reserves
>exist; standardized consignor contracts; detailed invoices that are given
to
>the purchasers; explanation of estimated values of works published in
>catalogs; and indemnification of purchases in the event of title defects.
>
> "In addition to the foregoing, this legislation may have the
>unintended consequence of encouraging collusive bidding," claimed
Sotheby's.
>"The bill would, in effect, require the auction house to disclose the
seller's
>minimum price for the property being auctioned. If all prospective buyers
>know the seller's minimum price in advance, there would not be any
incentive
>for bidders to enter an opening bid in the hope that the property will not
>be sold at auction. This would, in turn, provide potential buyers with the
>opportunity to seek to negotiate a private sale with the seller, but with
>the advantage of knowing the minimum price that the seller is willing to
>accept. Auction houses in other countries are not subject to such a
>requirement. Consequently, sellers would elect to sell their property
>overseas rather than in New York State."
>
> Thus, "Sotheby's strongly opposes this legislation and respectfully
>requests that the bill be held in committee."
================================================
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