My faith in the legal process may yet be tested. My son, a law student, sent me an article in the New York State Bar Association’s Entertainment, Art, and Sports Journal-Spring 2010 edition titled: The House Always Wins: A Call to Reform Art Auction House Regulations. It was submitted and written by a 3rd year law student Jacqueline Tate, who also had interned at Christie’s. Her case starts on page 32 of the Journal
For as long as I have been in this business, nothing has disturb me more than how the industry has allowed the Sotheby’s/Christie’s duopoly to instill an acceptance of deception and fraud in the auction process. Just because they were convicted of collusion back in 2001, doesn’t mean it stopped; compare how incredibly, they both schedule sales of similar categories at identical time periods, but never at the same time of day. It’s an amazing phenomenon!
With recent public debate on what necessary regulation is needed in the banking and finance industries, the timing of such requirements in the art and antiques sector bear a striking similarity. In her conclusion Ms. Tate has clearly laid out a case that establishes the need for auction transparency:
“This article assesses the regulations of the secretive practices of the two leading auction houses in New York. The duties of the auction houses and auctioneers to their fiduciaries are plainly laid out, and when seen in this light, are unmasked as inadequate. While art itself is not simply a financial investment, the business of selling art is just that—a business. The current New York auction house regulations fall short of balancing the interests of both the public and the business sector and wreak havoc on the art market by inflating prices and under-mining public trust. New York should require auction houses to uphold their fiduciary duties to sellers, buyers, and the public at large by becoming more transparent. The difficulties of dealing with a unique asset would be reconciled if the regulations were amended to require the disclosure of interests, reserves and guarantees on a lot-by-lot basis, and to forbid the practices of third-party guarantees and chandelier bidding”