Should Employees of an Auction House Bid in their own Auctions

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Posted By: B Hodes

Certainly allowing employees/relatives/principals of auctions at least creates the appearance of impropriety. So the hard line postion would be "no."

A more nuanced rule that allowed such people to bid would have to at least prevent these "in house" or "potentially conflicted" bidders from knowing any more than the average bidder or having any special privilege. By special knowledge or privilegde I mean that under no crcumstances should they be aware of any other bidders proxy or limit bid so that they could knowingly drive up the price without possibly winning (they would then have "insider information").

Additionally such "inside" bidders should not be able to place bids where other "normal bidders" cannot. For example if the Rule is that after the designated closing time only bidders who have already bid on an item may bid this must also apply to "in-house" bidders so that they can also only bid on items that they have already bid on. Another potential solution would be to require these bidders to place their bids only once -- by proxy -- on each item before the bidding has been opened to everyone else so that they cannot use information of others limit or proxy bids to increase the hammer price.

Frankly a really reputatable auction house should adopt some position on this "insider bidding" issue and state this position in its auction catalogues and on its web-site.