Kevin Keating responds to shill bidding allegations

[bcawly]

I sent the following email to Kevin Keating on February 9 after a review of Exhibit E and his response to the matter. Exhibit E standing alone does not disclose how the government's investigation confirmed collusion among specific parties to shill bid, it does clearly show the conflicted inter-party transactions that exist between the auction houses and those that do business with them.

There is the need for more transparent and verifiable auction practices and controls to detect and prevent shill bidding along the line I presented in my email to Kevin Keating that follows. It is my opinion, that there is a clear need for the major auction firms to step up and address this issue to ensure the integrity of their business practices. I stand behind my comments to Mr. Keating.

Bob Cawly



Re: Mastro-Legendary Auction's Shill Bidding Report Response
From Robert H. Cawly
To qualityautographs qualityautographs@msn.com

Kevin

Just let me say that after reviewing Exhibit E, it appears to me that you were also a victim of the shill bidding and that your bidding patterns were customary with many dealers and collectors that desire to take an early position on a number of lots to hold a place in extended bidding. In any event, the infraction is one of RELATED PARTY TRANSACTIONS which make you ineligible to bid. The more appropriate classification would be "Bids by Ineligible Bidders" as opposed to calling them all shill bids.

While the effect is the same as placing a shill bid, the implications are completely different. All reputable auction houses should post a list of Related Parties and make known the Related Party Policies which would include auction house employees, and employees of subcontractors, authentication firms and other related companies.

The real issues reside with the business practices of the auction firms. It is up to the auction house to enforce its own rules, not the bidders. The prudent auction house would have each auction overseen by an well known and reputable independent accountant that would oversee the bidding process, and audit the auction records. This one step would clearly establish what auction firms are interested in restoring honesty and integrity to our hobby and care about their firm's credibility. The expense of such a process would clearly be affordable and a sound investment.

Knowing of your credentials and reputation for integrity from people in the industry and notably fellow UACC members, let me express my full confidence in your response in this matter.

Robert H Cawly, CPA
UACC RD326