Heritage Live Auction -- Black Swamp debacle

[David R]

Originally Posted by Matthew H

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

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

[Peter_Spaeth]

Originally Posted by David R

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?

[David R]

Originally Posted by Peter_Spaeth

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 :-)

[David R]

Originally Posted by Peter_Spaeth

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?

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.

[calvindog]

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.

[Peter_Spaeth]

Originally Posted by calvindog

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.

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

[calvindog]

Originally Posted by Peter_Spaeth

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

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.

[Peter_Spaeth]

Originally Posted by David R

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.

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.

[Peter_Spaeth]

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.

[David R]

Originally Posted by Peter_Spaeth

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.

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?

[Peter_Spaeth]

Originally Posted by David R

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.

[Peter_Spaeth]

Originally Posted by David R

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?

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.

[David R]

Originally Posted by Peter_Spaeth

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.

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.

[benjulmag]

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.

[kcohen]

Originally Posted by David R

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.

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