Restored Honus Wagner at SCP Auctions

[Hankphenom]

Originally Posted by benjulmag

This item has a reserve. Here is how the auction rules read on reserves: RESERVES A Reserve price is a minimum bid below which the lot will not be sold. Accordingly, if the reserve price is not met at the conclusion of the auction, the lot will not be sold. Reserve bid prices are not publicly available and will not be published. Any item with an unmet reserve will be annotated with "Reserve Not Met" in the online bidding. SCP may implement this reserve by bidding on behalf of the consigner and may place a bid up to the amount one increment below the reserve, by placing successive bids if necessary. No reserve bids placed by SCP will be executed at a level greater than one bid below the actual reserve. Any lot that had an unmet reserve at the conclusion of the auction will show as a "PASS" in the online catalog. Reserves when in place will be pre-determined and set within the auction software prior to the start of the auction. Maximum bids will be treated as straight bids on items with reserves until the reserve price is met. If you place a maximum bid in excess of a reserve amount that has not yet been met, your bid will automatically be placed at the reserve price. All bids placed after a reserve has been met will continue with normal bidding increments unless straight bids are placed by a bidder.

The point is we have no idea how many, if any, of these recent bids are anything more than the house making consecutive bids on behalf of the consignor to give the impression of bidder interest (which is exactly what is needed to generate the highest price). Maybe SCP read Jeff's prior post (#22) in this thread commenting on the lack of bidding the first day of bidding? Suddenly the bids started coming in and in Jeff's next post 13 hours later the bidding (with the BP) had hit the psychologically significant $1M level.

This to me well symbolizes the deceptive (but legal aspect) of the auction business -- the ability of the house to exercise bids on behalf of the consignor up to (the low end of) the item's estimated value. This tactic is universally employed by all prominent HAs across all fields of collecting, and absent federal legislation prohibiting the practice almost certainly will continue. HAs are expected by their consignors (and shareholders) to generate the highest possible prices for their consignors, and what state would dare proscribe the practice and induce HAs thinking of setting up/already headquartered in their jurisdictions to flee to a neighboring state? Not to mention too I doubt these states mind receiving the extra sales/use tax they receive by higher auctions prices.

I have referred to this practice of HAs exercising secret bids on behalf of the consignor to induce prospective bidders to believe there is genuine market interest at those levels as legalized fraud. Yes, if one reads the fine print one can be put on notice of the practice and therefore the uncertainty of the genuineness of any bid below the reserve price. But IMO it is the exception, not the rule, that auction observers are aware of what the auction rules allow to take place behind the scenes. Isn't the premise behind the illegality of fraudulent practices society's refusal to be a party to inducing people to believe something that in fact is not true, all with the objective of getting a person to be willing to pay something that otherwise he/she would not pay? HAs will respond that by disclosing in the rules that the practice exists, therefore bidders/observers have been fairly put on notice. But is that really true? At the end of the day why should a bidder need to have any uncertainty whether he/she is bidding against a "real" person?

The distinction between this practice and shill bidding strikes me as negligible. I thought AH's prohibited consignors from bidding on their own items. How is the AH doing it for them any different?