New lawsuit accuses PWCC of massive shill bidding

[calvindog]

Originally Posted by Balticfox

That word would be "infamous".

Congrats!

[Gorditadogg]

Originally Posted by Balticfox

That word would be "infamous".

In-famous means you're more than famous.

Ned Nederlander

Sent from my SM-S906U using Tapatalk

[steve B]

Originally Posted by Tabe

I'm curious to see the math behind their numbers. They claim they sustained losses of $13.9m because of PWCC but spent just over $10m on PWCC's platform. So they're blaming PWCC for a LOT of losses outside of the PWCC platform. OK...

Maybe an accounting thing?

Having huge bids outstanding means tying up money that could be spent somewhere else. So purchases not made and profits lost because of that?

Not that it would have been a good practice to operate with so little reserve cash like that. But they admit placing stupid bids to get showy stuff to auction.

[steve B]

Originally Posted by Peter_Spaeth

That's my point. You may not be found guilty beyond a reasonable doubt even though you actually committed the crime. The system is imperfect. And of course occasionally people who did not commit the crime are found guilty.

Or of course, not even getting to trial.
There's a Texas judge who posts a lot of his hearings, many on probable cause.
On some, it's pretty obvious the person did what the charge says.
But, the facts are weak/
Like one woman was charged with DUI and probably a couple other things.
Car hits another car on the high way, leaves.
Witness gives plate number to police who go to the house.
Woman who is the registered owner answers the door obviously drunk.

Witness only had the plate number. Cops only had the registration and that dhe was drunk at home. So no evidence of being the driver, or of being drunk while driving because she could have gotten home sober and hit the bottle straight away.

Dismissed......

Yeah, she did it. But it's not proveable.

[steve B]

Originally Posted by jingram058

Without any theatrics or drama, may I ask a simple question? I know some of you are lawyers. Whatever happened to double jeopardy? If you are found guilty or not guilty, should that not be the end of it? When did it become acceptable to have a criminal AND a civil trial? Has that always been the case? First time I saw this was with OJ.

Lets say I'm in the crosswalk and you run me over.
And you get caught.

Criminally you could be found guilty or not guilty of a few things. None of that compensates me for my injuries.

So I have to sue to get my bills and loss of work covered. (Or more likely here in MA, my insurance makes a deal with your insurance company. )

Or the reverse.
I do something illegal causing you a loss. So you sue me. In the process of that it turns out the illegal thing gets found out. Now I can be arrested for that.

[steve B]

Originally Posted by Section103

There are few things in life I can count on, but a legal discussion on Net54 ~always~ has that "je ne sais quoi" quality.

9:22 is too early to start drinking bourbon and Im mad as hell about it.

It's always noon somewhere

[raulus]

Bloody double post.

[raulus]

Circling back to something in this complaint that I'm still not sure that I follow. In terms of the damages side, the notion that the entire market was inflated based on an army of shills has always been an argument that I've struggled to really get behind. I understand the concept behind the market being inflated. I just don't understand why there would be damages.

It's not like someone forced you to buy these cards, or that you were somehow under any obligation to buy them at the offered price. You chose to buy them, and you chose to buy them at a specific price. Whether that price was X or 2X or 10X is kinda your decision to make. Each of us makes a bucketload of decisions at every auction or show to decide when we're ready to tap out, and let something go to someone who's willing to bid more irresponsibly than we are.

Setting aside the shilling aspect, which I agree is wrong for any auctions or items that were indeed shilled, the fact that someone chose to keep bidding until they won, and their level of bidding was based on what they thought the item was worth, which may also in part have been based on what others were paying, the whole thing just seems very contrived to me to suggest that you were harmed by your own decision to keep bidding.

Maybe just to emphasize again, I completely get the idea that shilling destroys the integrity of the auction process, and should never be allowed. But that's a different issue than your experience suffering damages, unless an auction item that you bought was specifically shilled, and therefore the price for that specific item was artificially inflated.

Setting aside the specific shilling issue, either you choose to buy the stuff at the going rate, or you sit it out until you're ready to buy, or you wait patiently (perhaps indefinitely) until the prices come to you. Complaining that you got ripped off seems really bizarre after you made your own independent decision to buy.

And if I'm being honest, it seems a little bit self-indulgent to suggest that you have a right to buy cardboard at a price that you like better than the actual price that you paid.

[Peter_Spaeth]

Not endorsing it, but the theory is that if shill bidding inflates the price for an auction, it gets reported as a comp which then influences the price of the next sale of the same or similar item.

[raulus]

Originally Posted by Peter_Spaeth

Not endorsing it, but the theory is that if shill bidding inflates the price for an auction, it gets reported as a comp which then influences the price of the next sale of the same or similar item.

Fair enough. Maybe to clarify, I get the general theory. I just don’t get the fiction where you ignore that you had a choice to bid at that price and proceeded of your own volition.

[Peter_Spaeth]

Originally Posted by raulus

Fair enough. Maybe to clarify, I get the general theory. I just don’t get the fiction where you ignore that you had a choice to bid at that price and proceeded of your own volition.

Nearly all purchases are voluntary. How does that negate whether the price was driven by fraud? In my example I was "willing" to pay the higher price because I assumed the prior sale honestly reflected the market.

[raulus]

Originally Posted by Peter_Spaeth

Nearly all purchases are voluntary. How does that negate whether the price was driven by fraud? In my example I was "willing" to pay the higher price because I assumed the prior sale honestly reflected the market.

I guess that gets back to the role of comps and just how much stock we should put in them. Just because someone else made a stupid decision about how much they were willing to pay doesn't mean that I should be similarly inclined.

But it also gets to trying to shift blame for your own stupid decisions. I tend to take a dim view when it comes to shifting the responsibility for our own actions, particularly when the demand is to be compensated for it.

Edited to add: To some extent, I'll also suggest that viewing cardboard as an investment is a large part of the problem. If you view the cards as something you enjoy, that maybe will hold its value if you're lucky, then your approach to setting a price that works for you is more about what it's worth to you, and less about what you think it will be worth in the future.

[Peter_Spaeth]

Some people claim that there's a woman to blame
But I know
It's my own damn fault

[parkplace33]

Originally Posted by raulus

I guess that gets back to the role of comps and just how much stock we should put in them. Just because someone else made a stupid decision about how much they were willing to pay doesn't mean that I should be similarly inclined.

But it also gets to trying to shift blame for your own stupid decisions. I tend to take a dim view when it comes to shifting the responsibility for our own actions, particularly when the demand is to be compensated for it.

Edited to add: To some extent, I'll also suggest that viewing cardboard as an investment is a large part of the problem. If you view the cards as something you enjoy, that maybe will hold its value if you're lucky, then your approach to setting a price that works for you is more about what it's worth to you, and less about what you think it will be worth in the future.

Totally agree with you. But the comps value has overtaken the hobby. You go to a card show, you really not negoiating with the dealer, you are negoiating with comps. Same on FB or here, its all about comps.

And the investment piece is the new norm, sadly. I love cards and enjoy cards, but I feel like the ones who actually enjoy these things are getting smaller and smaller.

[raulus]

Originally Posted by parkplace33

Totally agree with you. But the comps value has overtaken the hobby. You go to a card show, you really not negoiating with the dealer, you are negoiating with comps. Same on FB or here, its all about comps.

And the investment piece is the new norm, sadly. I love cards and enjoy cards, but I feel like the ones who actually enjoy these things are getting smaller and smaller.

For the cards in question, were there really a lot of comps?

Most of the stuff seems like it was shiny, new, and limited production stuff where there probably was little or nothing in the way of comps.

[parkplace33]

Originally Posted by raulus

For the cards in question, were there really a lot of comps?

Most of the stuff seems like it was shiny, new, and limited production stuff where there probably was little or nothing in the way of comps.

In PWCC, tons of vintage. And most/if not all of the sales were always higher than sales on other platforms.

If I saw a PWCC on a vintage card sale, I was always leary.

[raulus]

Originally Posted by parkplace33

In PWCC, tons of vintage. And most/if not all of the sales were always higher than sales on other platforms.

If I saw a PWCC on a vintage card sale, I was always leary.

Right. But wasn't this lawsuit from Alt based on very specific stuff that they bought that was modern? And wasn't most of that modern stuff manufactured rarities, such that there were very few direct comps?

I suppose you could always sort of attempt to convert your comps across lines. If MJ's 86/87 Fleer in PSA 10 is worth $900k, then some over-hyped football rookie in the rainbow refractor 1/1 manufactured rarity must be worth at least half that!

[Peter_Spaeth]

Originally Posted by parkplace33

In PWCC, tons of vintage. And most/if not all of the sales were always higher than sales on other platforms.

If I saw a PWCC on a vintage card sale, I was always leary.

Agreed, but for me, mostly for other reasons.

[perezfan]

Originally Posted by Peter_Spaeth

Agreed, but for me, mostly for other reasons.

Same here (snip snip).

[Aquarian Sports Cards]

Originally Posted by Peter_Spaeth

Not endorsing it, but the theory is that if shill bidding inflates the price for an auction, it gets reported as a comp which then influences the price of the next sale of the same or similar item.

But the complainant would also benefit from that as a seller, so that seems a weird argument.

[edhans]

I've never completely bought into the argument that shill bidding affects market values. Obviously if a lot is won by a consignor or someone acting on his behalf, that does artificially inflate the market value (comps) of the card(s) in that lot.

But if the lot is won by a buyer not connected to the auction house or consignor, can we really argue that the value is artificially inflated? Other than the public reporting, how is that transaction different than a buyer negotiating and purchasing the item from a dealer at a show? There is an independent buyer and seller who have agreed to a price. Does that not establish a market price? Why do we need a third party (the underbidder) to establish a market?

[Leon]

Originally Posted by edhans

I've never completely bought into the argument that shill bidding affects market values. Obviously if a lot is won by a consignor or someone acting on his behalf, that does artificially inflate the market value (comps) of the card(s) in that lot.

But if the lot is won by a buyer not connected to the auction house or consignor, can we really argue that the value is artificially inflated? Other than the public reporting, how is that transaction different than a buyer negotiating and purchasing the item from a dealer at a show? There is an independent buyer and seller who have agreed to a price. Does that not establish a market price? Why do we need a third party (the underbidder) to establish a market?

As John Burke once told me, the most uderrated bidder for auctioneers is the underbidder.

Also, if someone does a comp on one of my cards, I laugh. I generally don't sell average cards and get higher prices than average "comps".
.

[Fuddjcal]

Originally Posted by parkplace33

In PWCC, tons of vintage. And most/if not all of the sales were always higher than sales on other platforms.

If I saw a PWCC on a vintage card sale, I was always leary.

HMMMM. Sounds vaguely familiar to what's currently happening at "PWCC by Fanatics" right now.

[Peter_Spaeth]

Originally Posted by edhans

I've never completely bought into the argument that shill bidding affects market values. Obviously if a lot is won by a consignor or someone acting on his behalf, that does artificially inflate the market value (comps) of the card(s) in that lot.

But if the lot is won by a buyer not connected to the auction house or consignor, can we really argue that the value is artificially inflated? Other than the public reporting, how is that transaction different than a buyer negotiating and purchasing the item from a dealer at a show? There is an independent buyer and seller who have agreed to a price. Does that not establish a market price? Why do we need a third party (the underbidder) to establish a market?

Perhaps I am misunderstanding the point but I don't follow. If but for shill bids I would have won a card for (say) 1000, but because of a shill bid at 1100 I was pushed to 1200, how is that not artificially inflated?

[ullmandds]

Originally Posted by Peter_Spaeth

Perhaps I am misunderstanding the point but I don't follow. If but for shill bids I would have won a card for (say) 1000, but because of a shill bid at 1100 I was pushed to 1200, how is that not artificially inflated?

I think ed's point is that the ultimate high bidder was "willing" to pay a higher price therefore it should not be "" inflated. I disagree with this sentiment.

[dbussell12]

Originally Posted by Peter_Spaeth

Perhaps I am misunderstanding the point but I don't follow. If but for shill bids I would have won a card for (say) 1000, but because of a shill bid at 1100 I was pushed to 1200, how is that not artificially inflated?

yes. value is subjective, markets are objective. individuals pull from market data to correlate perceived subjective value with mass objective value and attempt to deduce best paths forward (ie 'does how i value this card correlate with how others value this card? + if so/not, how do i proceed accordingly?). if the market perception of a card value is inflated by bid pumping and does not accurately reflect 'real data' (ie real buyers) -- that is artificial inflation of market value; skews market data for a buyer's interfacing w/ subjective valuation vs market.

[jayshum]

Originally Posted by edhans

I've never completely bought into the argument that shill bidding affects market values. Obviously if a lot is won by a consignor or someone acting on his behalf, that does artificially inflate the market value (comps) of the card(s) in that lot.

But if the lot is won by a buyer not connected to the auction house or consignor, can we really argue that the value is artificially inflated? Other than the public reporting, how is that transaction different than a buyer negotiating and purchasing the item from a dealer at a show? There is an independent buyer and seller who have agreed to a price. Does that not establish a market price? Why do we need a third party (the underbidder) to establish a market?

How do you tell the difference when looking at past sales for comps? You can't which is why shill bidding increases the supposed market value of a card.

[Peter_Spaeth]

Originally Posted by ullmandds

I think ed's point is that the ultimate high bidder was "willing" to pay a higher price therefore it should not be "" inflated. I disagree with this sentiment.

Right. Where the price of a stock is inflated because the issuer withheld material information, people are still "willing" to pay the inflated price, but that does not negate fraud. It is a non sequitur IMO.

[dbussell12]

Originally Posted by Peter_Spaeth

Right. Where the price of a stock is inflated because the issuer withheld material information, people are still "willing" to pay the inflated price, but that does not negate fraud. It is a non sequitur IMO.

again, correct. market manipulation is an objective fact. non-correlative with the subjective decision by any individual buyer to participate in said market after the fact. entirely different discussion

[edhans]

My main point is that a willing buyer and a willing seller should be sufficient to establish a "market value". We shouldn't require validation in the form of a third party underbidder. I don't think the presence of shill bids creates imperfect information. That is, it doesn't change what the buyer is willing to pay. On the flip side, we may conclude that some values presented in price trackers are deflated, since the buyer may have gone even higher, but didn't need to since there was no underbidder.

I do hope everyone understands that I do not condoning shill bidding. Just pointing out that its effect on "market value" may be somewhat overstated.

[jayshum]

Originally Posted by edhans

My main point is that a willing buyer and a willing seller should be sufficient to establish a "market value". We shouldn't require validation in the form of a third party underbidder. I don't think the presence of shill bids creates imperfect information. That is, it doesn't change what the buyer is willing to pay. On the flip side, we may conclude that some values presented in price trackers are deflated, since the buyer may have gone even higher, but didn't need to since there was no underbidder.

I do hope everyone understands that I do not condoning shill bidding. Just pointing out that its effect on "market value" may be somewhat overstated.

But if the sale isn't real because the high bidder was a shill bidder, then the reported values are inflated because no real buyer was willing to pay that much.

[edhans]

Originally Posted by jayshum

But if the sale isn't real because the high bidder was a shill bidder, then the reported values are inflated because no real buyer was willing to pay that much.

Yes, as I stated above.

[dbussell12]

Originally Posted by edhans

My main point is that a willing buyer and a willing seller should be sufficient to establish a "market value". We shouldn't require validation in the form of a third party underbidder. I don't think the presence of shill bids creates imperfect information. That is, it doesn't change what the buyer is willing to pay. On the flip side, we may conclude that some values presented in price trackers are deflated, since the buyer may have gone even higher, but didn't need to since there was no underbidder.

I do hope everyone understands that I do not condoning shill bidding. Just pointing out that its effect on "market value" may be somewhat overstated.

what constitutes a 'willing buyer' is determined by the information the buyer has at hand to inform their decision making. a buyer can only be 'willing' with accurate and adequate information to establish what they are buying and why they are paying what they are paying to purchase said item/service. they may be willing to ultimately sell the farm for any given item. but that is case by case. it isn't a market informed decision. you see this kind of methodology in drug users and addicts, which is why studying drug markets gives you insight into the instability and fallibility of markets as a whole. they are determined by human behavior.

what a buyer is willing to pay typically (unless the buyer is uneducated or functioning a vacuum of their own imagined world) has a direct relationship with established market precedents -- ie, comparative analysis of the marketplace one is operating in. some buyers may be willing to pay far more or far less depending on their real life circumstances for any given item or service. this is exceptional market behavior. these tend to be outliers. ie someone who is willing to pay 5m$ for a carton of eggs.

market value is contextual. buyer and seller don't operate in a vacuum. both use the market environment itself to contextualize their relationship; my willingness to sell you an item and your willingness to purchase said item for any given price point and where we meet is the market environment itself, as you are observing at the ground level. but a market itself is that single relationship times 10000x.

its a logical fallacy to assume that a willing buyer and a willing seller don't take place within said context -- because all transactions occur and are weighed (again, unless buyer and or seller are uneducated, such as paying 30m$ for a penny sleeve) to be reasonable or unreasonable therein. if we were on mars and you were the only person i could buy or sell any given item from, you would determine the market value and i would either have to accede, or move on. a market is the constituent buyers and sellers of a house, a card, what have you. supply and demand is contextual unless i need your item to survive and i have no where else to acquire it from.

i may be willing to pay 10$m for your item, but if i can go down the street and get it for $5 from five other people, i'm likely not going to be willing to pay you 10$m. if you remove those other five people from the market or offer them a false sum which makes them believe their item is worth 10$m because you offered them 10$m for it and they change their prices, then i have to be willing to pay 10$m due to the inflationary imagination of the market (false buyer[s]) or else move on.

i hope this makes sense. any individual buyer may well be willing to ultimately pay 30m$ for said penny sleeve; that is their prerogative. if you create, whether by imagination or shill bidding or otherwise, an environment where fifty million buyers are willing to pay 30m$ for a penny sleeve, you've really captured peoples' imaginations...

[Peter_Spaeth]

Ed, suppose after the conclusion of an auction all max bids became known. Are those a better indicator of "market value" than the actual sale price? After all, they reflect what someone was "willing" to pay?

[Exhibitman]

Originally Posted by raulus

Fair enough. Maybe to clarify, I get the general theory. I just don’t get the fiction where you ignore that you had a choice to bid at that price and proceeded of your own volition.

Setting aside the fact that undisclosed shill bidding is illegal in OR where PWCC operated, we can argue about the margins of what is tolerable on the spectrum between the auctioneer driving up the bid using 'house' accounts and inside information about the actual bidders' maximums (Mastro) and a consignor having a friend bid to a specific level w/o the auctioneer's participation and if there is an actual risk of having to 'buy' the card from the auctioneer (i.e., pay for it and take delivery).

My view is that if you want to have a reserve auction, have one. If you want to set a floor on a card, set it. But don't claim to sell in an absolute auction and then engage in or tolerate shilling to put a floor under the item. Just doesn't smell right to me. Again, legalities aside.

As for comps, I agree with Leon when it comes to rare items. There are no comps, so fighting over the price is silly because I am not going to negotiate over it. Modern cards are so commoditized that comps are ubiquitous. I have four apps available on my phone plus eBay to check prices. All I hear at shows from modern card shoppers is “Card Ladder this” and “Wax Stat that”, and at the last show I attended every table had at least a customer or two furiously fingering something at his crotch (oh, get your minds out of the gutter; I mean their phones, checking comps).

[lumberjack]

Al Taubmann, a guy who owned a lot of America, went to prison after Christie's was found guilty of fixing prices.

I was among a number of individuals who received checks for being the javlin catchers in a Christie's East sports auction. I'm speaking of the BB Mag photo auction. It wasn't much money in case you are wondering.

Bill Mastro and the lads at Mastro's AH went to jail as well. Shill bidding. Nobody got compensated for their fraud, which went on for years.

John Rogers scammed EVERYBODY. He owed millions. Maybe the idiots at the banks who were snowed by his con got a small percentage of their loans back. I doubt if any memorabilia people received ten cents.

All this shill bidding and foolishness, which could make you think, "Hey things aren't what they seem,"....And the prices have never come down.

[raulus]

Originally Posted by Exhibitman

Setting aside the fact that undisclosed shill bidding is illegal in OR where PWCC operated, we can argue about the margins of what is tolerable on the spectrum between the auctioneer driving up the bid using 'house' accounts and inside information about the actual bidders' maximums (Mastro) and a consignor having a friend bid to a specific level w/o the auctioneer's participation and if there is an actual risk of having to 'buy' the card from the auctioneer (i.e., pay for it and take delivery).

My view is that if you want to have a reserve auction, have one. If you want to set a floor on a card, set it. But don't claim to sell in an absolute auction and then engage in or tolerate shilling to put a floor under the item. Just doesn't smell right to me. Again, legalities aside.

As for comps, I agree with Leon when it comes to rare items. There are no comps, so fighting over the price is silly because I am not going to negotiate over it. Modern cards are so commoditized that comps are ubiquitous. I have four apps available on my phone plus eBay to check prices. All I hear at shows from modern card shoppers is “Card Ladder this” and “Wax Stat that”, and at the last show I attended every table had at least a customer or two furiously fingering something at his crotch (oh, get your minds out of the gutter; I mean their phones, checking comps).

I get the argument that if my specific item is shilled such that it drives up the amount I pay, then I’ve been screwed and have damages.

What I’m less convinced about is the generally inflated market has caused me damages that I should be able to collect. As an analogy, just because some people are willing to pay $20 for a dozen eggs at Whole Paycheck doesn’t mean that I have damages because I pay $5 per dozen for mine at the regular Joe grocery store, even though the price for my eggs was influenced by the fact that some people pay a whole lot more for their eggs at Whole Paycheck.

[Peter_Spaeth]

Originally Posted by raulus

I get the argument that if my specific item is shilled such that it drives up the amount I pay, then I’ve been screwed and have damages.

What I’m less convinced about is the generally inflated market has caused me damages that I should be able to collect. As an analogy, just because some people are willing to pay $20 for a dozen eggs at Whole Paycheck doesn’t mean that I have damages because I pay $5 per dozen for mine at the regular Joe grocery store, even though the price for my eggs was influenced by the fact that some people pay a whole lot more for their eggs at Whole Paycheck.

A price umbrella is a thing in economics/antitrust law. In other words, where dominant firms price fix or otherwise charge supra-competitive prices, the theory goes that customers of other firms are also harmed because those firms are able to raise their prices too. Is it hard to prove? Absolutely.

[raulus]

Originally Posted by Peter_Spaeth

A price umbrella is a thing in economics/antitrust law. In other words, where dominant firms price fix or otherwise charge supra-competitive prices, the theory goes that customers of other firms are also harmed because those firms are able to raise their prices too. Is it hard to prove? Absolutely.

Fun stuff.

I guess we’ll see how this suit plays out, including whether they can get anything to stick. Even if they can’t win, I think we’ll all be interested in any testimony or evidence introduced into the record.

[Peter_Spaeth]

Originally Posted by raulus

Fun stuff.

I guess we’ll see how this suit plays out, including whether they can get anything to stick. Even if they can’t win, I think we’ll all be interested in any testimony or evidence introduced into the record.

I would love to know who is providing the information that's the basis of the complaint and the extent to which they can back it up -- and who they will implicate.

[edhans]

Originally Posted by Peter_Spaeth

Ed, suppose after the conclusion of an auction all max bids became known. Are those a better indicator of "market value" than the actual sale price? After all, they reflect what someone was "willing" to pay?

Interesting concept. That maximum bid does reflect what the buyer would be willing to pay. Very little different than if he saw it on a dealer's table or on a website. So, in most cases, it would be a truer indicator of market value. Observe the important concept-there is no need for a third party (the underbidder). An arms length transaction between a buyer and a seller should be sufficient to establish a market value.

[dbussell12]

ed -- not to intrude here, but i don't think you are totally understanding the concepts you're using. market value and a single buyer's maximum bid or what a single buyer is willing to pay are not the same thing. a market is an ecosystem. a single buyer is a subjective, individual participant in said market environment.

just because one single buyer is willing to pay a certain amount for an item/good/service, it does not mean nor constitute 'market value'. market value is a sum, collective stabilization of value across multiple transactions/the landscape of the market itself.

you're thinking on a case by case basis. market value is the sum of case by case bases. no market works in a silo of single buyers. a single transaction between a buyer and a vendor constitutes a single record of a transaction within that market ecosystem, but it by no means establishes or even constitutes the concept of 'market value' itself but even as a sliver and incredibly small fragment of the entire tapestry of how markets move and how valuation is constituted en masse. a transaction value constituted has to be repeatable, not anomalous; again, a buyer's willingness to pay any given sum has to be proven standard by and to market motivations as a whole, not motivated by outlier motivations and personal/subjective factors of individual valuation of said product/service's perceived true worth.