My juices are flowing with a quotation of a dealer, Gordon VeneKlasen in Carol Vogel’s Inside Art column in today’s New York Times. The column dealt with the fact that Christie’s just purchased a contemporary art gallery. They now join Sotheby’s (who recently purchased Noortman Gallery) as auctioneers owning private galleries. “It begs serious regulation. Auction houses were once the middleman between a willing buyer and a willing seller. But today, between their mysterious reserves, private sales, third-party guarantees and now this, the lines have become completely (my emphasis) blurred.
I wish I could have had that quote, but if you’ve read some of my blogs, that dealer’s comment truly sums up what is chronically wrong with how these two have conspired to control the industry. From the advent of the buyer’s premium, the need to reverse their conflict of interest of controlling both sides of a transaction warrants some sort of oversight. Regulation is a tough form of control; I wouldn’t want to be regulated as a dealer. But the auctions in my industry now operate with blatant and unfettered manners of conflict of interest and deception that they have mandated as the generally accepted way of operating.
Regulation requires supervision within a codified framework of good business practices. Could you image the securities industry operating without the SEC? These auctioneers are not running businesses like a secretive hedge fund, but operate in a very public way. It leaves anyone who deals with them, both buyers and sellers, at a loss for their best interests.
Control is overdue because the collusion lawsuit against Sotheby’s and Christie’s several years ago didn’t change anything, but in actuality gave them a green light to expand their modes of operation. Unfortunately, a legal challenge in the form of a class action has not and will not work as long as there is no one with jurisdiction to act as a watchdog over their business methods and actions.
According to the article, Christie’s says that there will be strict rules in place about gallery bidding at its sales. That’s like the fox watching the hen house. Who’s watching bidders get scammed by secret reserves, or their hyping an item, or getting a cut from both the buyer and seller, etc, etc, etc. Regulation, it doesn’t sound so bad now does it.