Friday, October 3, 2008

Auctioneers and sellers: Sotheby's mixed role

The WSJ reports Sotheby's Faces Suit Over Disclosure
"Mr. Minor's attorneys say he purchased the work on advice from a Sotheby's specialist and didn't realize the auction house was selling the work to recoup money owed it by another collector. ...
Mr. Minor's suit highlights the increasingly blurred lines that can develop at auction houses between their traditional role as disinterested auctioneers and their emerging business as direct stakeholders or financiers of the work they auction. In their competition for market share and their battle to secure top art work, Sotheby's and Christie's are increasingly acquiring, trading and preselling stakes in works they auction."
...
"For buyers, deciphering the financial dealings behind a work of art has become increasingly difficult. In some cases, like Mr. Minor's, auction houses sell the work as collateral for loans. More commonly, they issue so-called "guarantees" -- promises to pay the seller a minimum price for the work sold through the auction house. The auction house has to pay the guarantee even if the work doesn't sell, so it becomes an effective stakeholder.
Guarantees have surged in recent years. Last year, Sotheby's issued $902 million in guarantees, double the amount in 2006, according to securities filings."

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.