Heritage Auctions Lawsuit

[barrysloate]

The disclosure issue aside, why would they have a rule that allows a consignor to bid on his own lots? Wouldn't it be prudent to put in writing that consignors may not under any circumstances bid on their own lots? What kind of policy is that?

[Jim VB]

I didn't understand this quote from Heritage:

""There's nothing illegal or unethical about us placing a bid prior to the auction starting," Rohan says, adding that Heritage doesn't compete or bid during auctions."


Huh? How do you place a bid prior to the auction starting? Do they mean they place the first bid at some level they are comfortable with, and that works as a hidden reserve as others bid?

I think that needs more explanation, not just disclosure.

[barrysloate]

The first bid may be a hidden reserve.

[Jim VB]

Originally Posted by barrysloate

The first bid may be a hidden reserve.

That was my first thought, Barry. But then they say "that Heritage doesn't compete or bid during auctions."

If their bid was designed to be a hidden reserve, they would have to use their bid to up the price once other bids were in, even if it was done automatically. To me, that's "bidding" during the auction.

[barrysloate]

Wes- I agree that giving a consignor a certain minimum guarantee is an accepted practice, and many times it's the prudent thing to do.

But a house bid that protects a lot should be placed only by the auction house. If I understand Heritage's policy, they are letting consignors place the bids themselves as they see fit? It's hard to imagine that is a good policy.

[Peter_Spaeth]

Originally Posted by barrysloate

Wes- I agree that giving a consignor a certain minimum guarantee is an accepted practice, and many times it's the prudent thing to do.

But a house bid that protects a lot should be placed only by the auction house. If I understand Heritage's policy, they are letting consignors place the bids themselves as they see fit? It's hard to imagine that is a good policy.

If it helps them with consignors and doesn't hurt them with buyers, why isn't it a good policy?

[Jim VB]

Originally Posted by Peter_Spaeth

If it helps them with consignors and doesn't hurt them with buyers, why isn't it a good policy?

Peter and Adam,

Aren't you guys making the point that what Heritage is accused of doing leaves them firm footing LEGALLY?

If so, I don't think most of us are disputing that. I'd like a better understanding of exactly what it is they're doing, but I do think they are probably within the letter of the law.

However, if this pseudo-bidding is functioning as a hidden reserve, then I think it needs to be spelled out more clearly.

It doesn't sound to me like this lawsuit will go anywhere, but it may have exposed something most bidders were unaware of.

[Wesley]

Barry, As someone is the business, you know the hard part is getting the consignments, and if you have the right cards, then the buyers will come. Maybe sometimes the only way to attract consignors is to give them assurances that they will not lose their shirts with these terms.

Peter, I am NOT a great guy! But I do agree with you in that Heritage seems to be in good shape with it's written disclosures. Not sure where the plaintiff is going with this aside from creating some leverage for the seven figures that he believes he is owed. One thing I did find interesting in the blog article is the accusation that Heritage bids on items and then retracts it's bids. If that is the case then perhaps the intent is not to win the item back, but rather to just drive up the prices. In any event, allowing the consignor or the auction house to bid is a terrible policy for Heritage bidders.