Absolutely agree.

Yes, that's the standard, but in my view it would be very difficult to say anything at all about the cards that wouldn't be misleading if it omitted this clearly material information. And if you said absolutely nothing, surely you would get inquiries anyhow. EDIT TO ADD And even if a good lawyer could successfully make a "no duty to disclose" argument, such as one sometimes sees in securities fraud cases, it's still a lousy business practice for an auction house to conceal material information about a card, and it would not have served Heritage well down the road.

Corey, my point is that an auction house which clearly is concerned with maximizing its sales numbers by bidding on its own lots and burying this information within a paragraph 21 of its rules is clearly one that is concerned with one thing, and one thing only: maximizing its sales numbers. Very few people on this board believes these practices are ethical.

To suggest then that the same auction house IS ethical due to its handling/marketing of the Black Swamp Find is, with all respect, a bit hard to swallow. Heritage marketed this find with one thing in mind in my opinion: to maximize its chances of getting more consignments in the future. All those TV shows, newspaper stories, etc. did not drive the price of the cards up -- it served instead to get more free publicity for Heritage. My criticism was simply that if this auction house is looking to drive up its numbers it should do so for the consigners first -- instead of for itself.

Huh? Auction houses attract more consignments in the future by getting high numbers for their cards, not merely by what they have for sale. I don't follow your logic here. How was it in Heritage's interest not to maximize value?

You'd have to ask them. But what I do know is what the point of appearing on television shows and giving dozens of newspapers interviews about the Find was -- to get more future consignments. And the publicity may have made up for inferior numbers from the sale of those cards.

Confused how by getting national attention to a product it will diminish the price? Goodwin had national attention on his SGC 40 Wagner and it went for a record price.

I'm going to have to politely disagree with this statement as I do not see how Heritage could have in any meaningful way written up this find without mentioning the extraordinary condition of these cards in comparison to the extant population. Omitting that information would be such a conspicuous omission to an experienced collector to as a practical certainty result in someone asking Heritage if there were more cards in the find. If Heritage does though make the comparison IMO they are exposing themselves to legal exposure for failure to disclose material information. Taking all this into consideration along with the public pounding failure to disclose will generate, I believe disclosure was the correct business decision.

Incredible find with a remarkable and interesting story behind it. It deserved the coverage it got and showed a positive side of the hobby. Heritage may not have maximized on this find by disclosing and grading all the cards at once but they will certainly not lose business from having done it this way. Regardless of their motivation, and assuming this is their typical practice, collectors can feel a sense of relief knowing they were upfront. Are the auction houses supposed to favor their consignors over their customers or vice versa? Sometimes you cannot have it both ways.

The exposure they got from this find which will result in their getting more consignments from people who may not have found them otherwise. If it can in fact be concluded these 3 lots under performed, the next consignor of 800 ungraded high grade caramel cards (with 40 or more of each player) who simply wants to maximize every last penny out of their collection may not consider HA.

Agreed.

what if
 

They only graded one at a time, just listed current pop numbers and made no reference to possible future population numbers. I do not see how that is fraudulent? This was done all the time in the late 1990's when modern got hot. Could a lawyer please explain? That said it was nice of the family to do it like they did but I have to agree with Jeff I can't see Heritage or any Auction house selling them this way if they owned the cards.

Look, a family found cards in the attic -- those cards are worth x dollars, the hobby got national pub, more people will look in their attics, basements, etc.

Maybe a few more finds make the rounds. Meanwhile, the HOBBY gets great pub -- and the type we like.

And could YOU have done any better for the family?

Rich

I talked to many people outside of the hobby and they asked me if I had heard of this find. It was on the news in the papers on talk shows. I think they did their job and the bidders did theirs. That day estimates aside true market value for these lots were determined.

Agreed. And I don't think there would be anything fraudulent about that approach Glyn. And I do think an auction house could auction the cards without misleading hyperbole that might be considered fraudulent. Barry Sloate's descriptions when he did his auction were a good example - he showed a picture of the card with an accurate description of the condition and perhaps a few adjectives without a lot of superfluous BS. You don't need a lot of hyperbole and puffery to sell a PSA 10 Wagner or a PSA 9 Cobb. Perhaps any other approach than the one used by Heritage was out of the question once all the news reports about the details of the find hit the press, but it certainly affected the prices in a negative fashion IMHO.

David, how would they know which one would grade a 10 without showing them all to PSA?

Travis hit it on the head. Let the best dictate the rest. Sorta like they used to do with draft picks and their bonuses and contracts. Disclosing the extent of the population was the right thing to do. I'm not sure whose decision it was to proceed in this manner, but I think it will hurt the proceeds from the entire find.

Also, Heritage never said it would bring $1M. The talking heads did. You know, hobby experts.

They wouldn't. They could have them graded and then auctioned in small batches. That was just an example.

And then the pops would reflect how many were out there. And the huge premiums from being pseudo 1 of 1s would be lost. Or are you suggesting they somehow show them all to PSA, get them pregraded, but don't actually get them formally graded?

I was suggesting that they look at the cards or have someone who knows a little bit (not a grading company)look at them, pick out a few of the nicest ones first, have those graded, and then auction them off. The pop reports wouldn't show how many were out there because they wouldn't have them all graded at once. This of course depends on someone other than a grader at PSA or SGC being able to look at the cards initially and be able to tell generally which ones are in the nicest shape so that they can be sent in for grading :-)

Peter,
Let me suggest something else. Would there be anything wrong or fraudulent in this situation: I find 10 t206 Wagners in my attic that are in such good condition that they would grade between 7 and 9. I don't tell anyone about it. Instead, I pick out the nicest one, have it graded, and give it to an auction house to sell it for me. Over time I do the same with the rest. In this situation, does anyone really think I have a duty to "the hobby" or anyone else to disclose that I found 10 of these Wagners before I sell any? And can anyone really argue with what seems to me is a pretty self-evident point: I would make a lot more if I don't disclose them all or have them graded at the outset.

Of course you wouldn't have a duty to disclose that info.

And I love how Heritage is being put on a pedestal for their fine ethical behavior! Shame they bid on their own lots and buried that info in paragraph 21 of their auction rules.

IMO, Heritage had a legal duty to disclose all information in its exclusive possession that a reasonably prudent bidder would regard as material when evaluating whether and how high to bid. Accordingly, after further reflection I believe it would have been fraudulent for Heritage to have concealed the extent of the find REGARDLESS WHAT IT CHOSE TO SAY OR NOT SAY WHEN MARKETING THE FIND AND WRITING THE CATALOG DESCRIPTION. Any reasonable bidder would have regarded as critically important information when bidding on say, the PSA 10 Wagner, that there were 22 other examples graded 8 or higher that would soon hit the market, a number of them being 9's (not to mention another 15 graded as 7s). Or that when deciding what to pay for a PSA 9 Cobb that there were 14 more 9's to be soon released to the market. The final impact upon market value of the great majority of "find" cards once the find was fully absorbed by the hobby arguably would ten-fold. If this is not material information to a prospective bidder I'm struggling to know what is. In saying this I recognize others may disagree, and I respect that, but these are my views.

EDITED TO ADD in response to a subsequent point that I do not believe Heritage could have avoided this legal obligation by putting its head in the sand once it opened the box and saw the 700 E98s, and choosing to submit for grading only a select few. In this instance they would still be in exclusive possession that there were hundreds and hundreds more, many being superstars, that to the eye looked to be extremely high grade. I know if I was thinking on bidding on one of the select few that they had graded in this instance that I sure would want to know about the existence of these many other ungraded hundreds.

So you prefer to make more by a deception? Because that's what it is, whether or not a good lawyer could successfully argue no duty to disclose. Those 9 Wagners you are holding back obviously have an overwhelmingly material effect on the value of the one you are selling.

To elaborate, I agree David with what you said earlier that normally there is no duty in the abstract to disclose material information. It has to make what IS said false or misleading. I suppose if absolutely nothing were said, that standard might be satisfied -- although as a practical matter I don't think Heritage could have said nothing and in any event they would have to respond to questions.

But leaving that aside, I think it's ethically wrong to withhold the information, because it's deceptive as hell.

i am surprised to see the crusader for hobby transparency now advocating for withholding material information on the basis of a legal technicality. :D

No, I'm simply saying that an auction house which has no problem bidding on its lots (and buries this info deep in its rules) should also have no problem using the same level of ethics when dealing with and maximizing the value of the Black Swamp Find.

Thankfully I don't believe the law shares or recognizes that definition of deception when it comes to third-party business transactions. I think it would really create a lot of mischief (and lawsuits) if that were the law. For example, what if I later decided to destroy the other 9 Wagners after selling the first one? Would it still have been deceptive to not disclose I had the other 9 when I sold the first one? What if I decided to keep the other 9? Do I have to disclose when I sell the first one that I have 9 more that I plan to keep until I die? And if so, do I also have to disclose at that point what my life expectancy is so that the potential buyers can figure out when these 9 are likely to hit the market (i.e, when I will likely die and my family will sell them)? Where does the duty to disclose end?

As Robert Bork said, and Justice Ginsburg quoted in her recent Obamacare dissent, just because there is a slippery slope, you don't need to ski to the bottom of it.:)

David most issues are decided on a case by case basis, with regard to all the facts and circumstances. Why should this one be any different? Of course hard and fast rules are easier to enforce, but they also lead to unjust results. In any event, I am really talking more about ethics than law here, I think it's very easy to see why withholding information about your other 9 presumably intact Wagners is deceptive.

One other thought that occurred to me was whether the mere act of submitting the cards for grading was, due to the PSA pop report, a sufficient act of disclosure of the extent of the find. I'm not a TPG guy so I'm a bit unfamiliar with when pop reports are updated. Regardless whether this might work from a legal perspective, however, from a business perspective IMO it would be imprudent. It would be just a matter of a short period of time before someone would notice the incredible increase in the E98 population. At that point almost certainly detailed info on the extent of the pop change would appear on this board thereby providing essentially the same info Heritage revealed. So the end result would be that the info would still have gotten out, and Heritage would taken a big public relations hit for attempting to withhold material information.

Peter,
I really don't think it is deceptive to say nothing and just sell the card. I actually had a somewhat similar situation when I acquired a dozen overprinted scrap t206s several years ago. I did disclose all of them on this website with scans and later ended up selling some of them. It probably did affect the price negatively but I didn't mind -- I am a collector and don't really collect to make money from it so I thought the find was really neat and I disclosed all the cards. But if I was not a collector and I just wanted to maximize profits, I don't think there would have been anything unethical about just giving one to an auction house.

I guess we disagree then. Good discussion, interesting question.

Once the cards were graded, the cat was out of the bag. Whether or not to disclose pop numbers in the auction descriptions was really moot. Do we know if the consignors told HA to sell all the cards at once or if they were looking for HA's opinion on the best disposition and HA informed them of all of the options?

When the breadth of the find was made public I made a comment on another thread that if it was HA's suggestion to grade all the cards at once and tell the scope of the find, that it was done not for the benefit of the consignor or their buyers but for the benefit of HA.

Sports collectibles are only one segment of their business. If they had graded these cards a few at a time, at the end of 5 years we could all look back and see how they mislead us, it would have a direct impact on their reputation among the buyers of all segments of their business. They knew the consignors were going to do just fine getting the cards graded all at once even if they were going to be leaving money on the table by not grading and selling these off a few at a time.

A house needs buyers, even if you have disclosed that you bid up your stuff and buried it in paragraph 21.

I rarely post anymore because i'm generally disillusioned with the whole hobby, TPG grading and all, all the focus on money instead being happy with the beauty of the cards or the fun of collecting, so perhaps my post is not relevant. Oh, and likely not in tune with 'modern' perspectives either, but.......

All this talk of what constitutes legality and the look over there so I don't have to actually answer the question (paragraph 21, or whatever) is really quite tiresome.

Here you had some folks that found a bunch of old things, figured out they're worth something, connect with HA, and then sell a bunch for more money than they could ever imagine. These people are not just happy, they're ecstatic. Most people are just happy when the gift horse shows up and the need for a dental exam is the furthest thing from their minds.

Juxtapose that with the people on this thread touting "what a dumb ass way of going about thing when they could have gotten so much more" and the like.

Most of life and most of the world operates with good people doing good things. Regular folk don't get caught up so much on legal language and trying to squeeze out every last dime on each or any transaction.

Yes, any auction company works on behalf of its consignors and I have no doubts that HA explained the options; "no doubts" because I trust that they did, not that I know that they did. That's me, naive maybe, but I trust that there are way more good people and companies in the world than there are shysters. I still buy, a lot actually, as I own and run an antiques and collectibles business, and while each transaction is subject to some level of scrutiny, believing in people and their motives, companies included, seems to have a lot more payback than being being paranoid. Did HA pile on the p.r. - of course they did. They'd be idiots not to.

In the collectors world there is clearly room for cynism (see Mastro et al) but most of the real world still works on trust, thankfully, especially when good fortune is found. Congratulations to the family.

Agreed. Thanks.

heritage would be idiots to not pile on the p.r. for their benefit? but the family is just suppose to take their medicine and be happy they got something?

its always the nice people that get applauded for taking less. why should they get less? it was a missed opportunity. this find is their ONLY chance. heritage will have million dollar bats, jerseys in the future, but this family has this one chance to split up the loot among 20 members.

People say that there are people out there whose lives aren't all about money. but they dont say that about auction houses. why? because auction houses are a business, they are suppose to maximize their profits and people say good for them.

The first thing this family should have done, is to incorporate into a business.

"black swamp find, inc." now they are a business too. and if "black swamp find inc." -as a business- did everything they could to maximize profits for their business, would that NOT be okay then?

people see old ladies and grandpa's and they salivate and lick their chops.

this was a missed opportunity by the family for not taking a little time to hire a couple of graders and consultants independently for their opinions on how to maximize their find on a contingency fee.

they could have turned that honus wagner 10 into a hobby icon. they didn't.

Well said Travis.

I think you would need to fulfill your duty to "the hobby" by putting them up for sale on BST at heavily discounted prices.

I disagree with you on every single thing you said except the PR piece. What part of "it wasn't about the money to the family" don't you understand? They got less because they actually care about people. You really will never get it. It's just that simple.

lol

They sold about 5% of the cards for a half a million dollars. Heritage estimated the whole group was worth 2-3 million dollars. My guess is they are about right.
JimB

I was able to speak with the family right after the auction ended. Talk about some down to earth caring individuals. There biggest gain from this whole thing is that it reunited the family and brought bonds closer. It was never about the money or the recognition from the find. It all ended up making the hobby guys happy and the family happy. A win win IMO.

Bottom line.....on this board, Heritage could not have won. If they'd not disclosed all the cards in the find, they'd have been misleading the public. And while I like the OP and his doggedness on stuff like this, he would likely have been one of the people flaming them for not disclosing everything. If they do as they did and disclaim it, then they're not seeking the most for their clients. Geez....we can't have it both ways, can we?

My personal opinion, which, with $4.00 might buy you a cup of coffee.....is they did it the right way, grading all of them, disclosing the totals of each card and beginning to sell them off in groups at intervals over the next few years. Will the next group bring what that group did? Who knows. I think some of the family members are planning on keeping their groups or near sets from what I heard. So all 700+ may not see the hobby light of day immediately. Some of the people may not need that $150-$200K immediately. The money means a lot to a lot of people but some people may have the sentimentality of keeping something that their grandmother or great grandmother or father put away. Who knows. Like others, I've heard the family is happy with the results. Not sure if that $566K will be split among the 22 or if it was just one person's share or something. I'm sure the financials of it all are complicated and among the family.

Kudos to Heritage for doing it the way they did it.....

I STILL don't particularly like them bidding on their own auctions though as I think that could be fraught with issues. That's another issue for another thread though.....

Leon, some people will never understand where the family is coming from

You're laughing sarcastically at Leon? Treat the man with some respect. He provides this forum for you to come on here and talk about how brilliant you are.

P.S. It's easy to be brilliant when you can criticize auction houses for disclosing too much and disclosing too little.

The family would have been just as reunited if the cards had gone for more.

Actually I was laughing at your blog.

Why?

P.S. This is the actual, unedited, and completely original front scroll of your website (that's right, kids, this was intentional). Now everyone can have a good laugh.

By the way, given that you think my blog is such a joke, I figured I would add your website to my signature. That way, people can see what a real website should look like.

I like how you posted the congratulatory emails you received from other collectors about the 'interviews' you did of other collectors. That was a nice touch. That and your 'T206 Collectors Forum' which includes such threads as "B/S/T" and "Share Your Collection" and "Show Your Signed T206" and "Grading T206 Cards" and "T206 Forum - Any interest??" Of course, no one but you has ever posted on any of these threads -- and never will.

You're a bit delusional and smug and self-satisfied. Probably not the best guy to be criticizing me for advertising what members of the press have said about me in my pretty damn successful career.

Paul at what point did you figure out it was intentional? :rolleyes:

Crazy idea but it’s a business website and as a business he may want to use quotes that others have made about his legal performance to give confidence to perspective new clients. I know what you’re saying crazy and risky move on his part… :)

Also Jeff wasn't laughing at Leon but laughing in disagreement with Leon’s statement. Leon doesn’t have a problem with anyone disagreeing with him, and doing so isn’t showing a lack of respect for the effort of the site etc. even Leon will tell you that.

Cheers,

John