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Conflict of Interest
homerunhall
Posts: 2,498 ✭✭✭
Some of you have mentioned that you feel it's a conflict of interest for Collectors Universe to own PCGS and also Bowers and Merena and David Hall Rare Coins. We have addressed this issue before, but we can do it again.
Here's how we avoid the possibility of conflict of interest.
WE NEVER SUBMITT COINS THAT WE OWN TO PCGS FOR GRADING. WE ARE NEVER OUR OWN CUSTOMER.
All of the PCGS coins that B&M and DHRC sell are purchased in the secondary market. We buy coins from the people (usually dealers) who have PCGS coins for sale. If we buy a raw coin, we sell it raw. If we buy a coin in an NGC holder, we sell it in an NGC holder. If we buy a PCGS coin that looks like it has upgrade potential, we put it in a B&M or Kingswood auction and hope at least two bidders will make sure the coin brings a premium price. We do not use any type of PCGS grading for coins we own.
So if you see a lot of MS/PR69 modern coins in the DHRC inventory, it's because we buy them from the dealers that have them and we pay up for them. Ask the modern dealers, we're a big modern buyer...but we have never submitted a raw modern coin to PCGS.
I hope this clarifies the issue...there is no conflict of interest because we never submitt our coins to PCGS for grading.
Now..............
One thing has always puzzled me about the conflict of interest issue. Many people bag on PCGS about conflict of interest, but no one ever talks about the NGC/Heritage situation.
Heritage, or Steve Ivy and Jim Halperin, the owners of Heritage, own approximately 25% or 30% of NGC. Although I don't know the details of how the deal is structured, some of the principals have confirmed its existence to me.
Heritage claims they are the world's largest coin dealer and I believe they are. I'm pretty sure they are the biggest customer of all-time for the grading services. And they have an ownership interest in a major third party grading service.
What would the diamond market think if the world's largest diamond dealer owned 25% or 30% of GIA????
I am not saying there is anything wrong with this situation. In fact, I have no reason to believe otherwise.
I'm just baffled by the fact that I never see anybody talk about it.
David Hall
Here's how we avoid the possibility of conflict of interest.
WE NEVER SUBMITT COINS THAT WE OWN TO PCGS FOR GRADING. WE ARE NEVER OUR OWN CUSTOMER.
All of the PCGS coins that B&M and DHRC sell are purchased in the secondary market. We buy coins from the people (usually dealers) who have PCGS coins for sale. If we buy a raw coin, we sell it raw. If we buy a coin in an NGC holder, we sell it in an NGC holder. If we buy a PCGS coin that looks like it has upgrade potential, we put it in a B&M or Kingswood auction and hope at least two bidders will make sure the coin brings a premium price. We do not use any type of PCGS grading for coins we own.
So if you see a lot of MS/PR69 modern coins in the DHRC inventory, it's because we buy them from the dealers that have them and we pay up for them. Ask the modern dealers, we're a big modern buyer...but we have never submitted a raw modern coin to PCGS.
I hope this clarifies the issue...there is no conflict of interest because we never submitt our coins to PCGS for grading.
Now..............
One thing has always puzzled me about the conflict of interest issue. Many people bag on PCGS about conflict of interest, but no one ever talks about the NGC/Heritage situation.
Heritage, or Steve Ivy and Jim Halperin, the owners of Heritage, own approximately 25% or 30% of NGC. Although I don't know the details of how the deal is structured, some of the principals have confirmed its existence to me.
Heritage claims they are the world's largest coin dealer and I believe they are. I'm pretty sure they are the biggest customer of all-time for the grading services. And they have an ownership interest in a major third party grading service.
What would the diamond market think if the world's largest diamond dealer owned 25% or 30% of GIA????
I am not saying there is anything wrong with this situation. In fact, I have no reason to believe otherwise.
I'm just baffled by the fact that I never see anybody talk about it.
David Hall
0
Comments
Thanks Again,
David R. Golan
Who are you actually refering to in the "we" that you use in your post? Is that a collective "we" meaning any CU entity, any and every employee and or family member of a CU employee and as well as friends, ie other PCGS authorized dealers.
Chinese walls are know for not being that strong.
It just seems that if CU divested itself of PCGS, there were be no further questions of a conflict. As an attorney, I must maintain a position in my practice that even the specter of a conflict is the same as an actual conflict and therefore I have to be extremely diligent not to create or enter into such situations.
Why not just sell off PCGS and let it stand alone. With that many coins to grade, I'm sure PCGS doesn't need the other divisions of CU to bolster it?
Instead of casting aspersions on your competition, take the high road and then challenge the business practices of NGC.
One last point, please explain, if you can the how almost all of the PR70 DCAM Ikes came from the same submission from the same submittor.
Thanks,
Michael
MW Fattorosi Collection
We have discussed this before.
I am more concerned about the APPEARANCE of the conflict of interest than the actual conflict(s) itself(themselves). I don't see much actual conflict myself but it is getting more and more difficult to sell the truth about CLCT to my investing and collecting friends. From a marketing point of view, PCGS and CLCT along with DHRC is not set up properly to satisfy Wall Street. It is constantly on the defensive marketing wise.
#1 DHRC and CLCT are located in the same town (and building?). Heritage and NGC are not even in the same state. True B&M and PCGS are not in the same state either but the damage is already done. Appearance of conflict score NGC 1 PCGS 0.
#2 DHRC refuses to sell NGC slabs and other slabs when appropriate to do so whereas B&M and Heritage takes a more global view of selling different slabs. Score NGC 2 PCGS 0.
#3 DHRC, a division of CLCT, uses the name of the President of CLCT. Very confusing and creates the same APPEARANCE of conflict of interest. The name of DHRC needs to be changed to eliminate this quaqmire and confusion What is wrong with Van Simmons name or some other new name? The principals of NGC are nowhere to be found name-wise on the title of Heritage. Score NGC 3 PCGS 0.
#4 CLCT is a public corporation and as such, is under so much more public scrutiny than the privately held NGC so that when anyone in PCGS sneezes the entire world knows about it. When NGC really screws up no ever seems to know about it. This is one of the major disavantages of being a public corporation. Geez, you never had to deal with any of this when PCGS and DHRC was privately owned? You still seem to be amazed that this festering of public opinion continues unabated despite your attempts to deal with it. Score NGC 4 PCGS 0.
#5 You have failed to constantly advertise DHRC's policy that you have just stated in the posting below but the fact that it needs to be done all the time proves my point. DHRC and PCGS will always get "picked on" and "criticized" until the "firewall" I have spoken of many times is made very apparent. That "firewall" is invisible as it exists right now and it could easily be circumvented without any collector or dealer ever knowing about it.
This has constantly forced you to be on the defensive marketing wise and this needs to be cured once and for all.
There are other examples but this is just for STARTERS.
The corporate structure of CLCT and its divisions is obviously not pleasing Wall Street as well as its customers. Even its competitors is taking advantage of highlighting the glitches in CLCT/DHRC/PCGS structure in their advertising.
The fact that NGC is even more deeply flawed in your opinion (as well as mine) does not free or excuse you from making the changes that are so necessary for CLCT.
What we are posting goes to the heart of what needs to be done. The problem is that David hall, you are thinking as an honest man. You are a little over 50 years of age. As long as you are alive you will be honest and maintain strict codes of conduct. There is no doubt in my mind of that.
But you will not work and live forever and Bowers will not work and live forever. Therefore, as your legacy, you need to set up CLCT for the next generation of officers and executives who might unfortunately might not share quite your zeal for absolute integrity. You and the rest of us can only hope that we pick the best executives down the road in the next 10, 20 30 years or so. However as we have seen, we have seen too many Enrons etc. and they went downhill becuase of the lack of internal control.
David, you owe it to your family to protect their interest in this company that you have built up after you are gone 30 years from now. Start now to build the best and strongest model of CLCT all hobbies have ever seen; a model that can last 100 years or more after you are gone. That would be the best legacy you can leave your family and our hobby.
I have heard from time to time of CU subsidiaries submitting owned coins to PCGS for crossover. Are you 100% certain that you would know of this occurring?
I know for a fact that B&M submits consigned coins to PCGS for grading. I also know that at FUN last year I hand picked 12 NGC coins for crossover from the Evergreen Hoard that Legend had just purchased. These were from the box that had been set aside to try again (the whole deal had gone thru NGC just once and these were upgrade candidates in my mind). We were 0-12 on crossover. These coins were then consigned to the B&M auction and were submitted by B&M for crossover. About half crossed. So either PCGS didn't like Legend, does like B&M or is inconsistent in its processes. But since I know that B&M does indeed submit consigned coins to PCGS, what is in place to prevent them from submitting owned coins along with the consigned coins? How could they possibly be differentiated?
I bought a 1937 Proof Lincoln straight from B&M's inventory in a PCGS PR66red holder. It was billed as "PQ!"
It was listed at a "then" premium - $500.
When I got the coin it really was "PQ!"
I traded this coin to Don Merz in the deal for the 1937 Cameo.
PCGS just upgraded it to PR67red for Don.
A less scrupulous dealer would have engaged in self-dealing and upgraded the coin before it got out of the B&M inventory.
I have heard a few bash B&M on the boards, but all of my experiences with them have been good. Yes the are a little higher priced there, but you get what you pay for most of the time.
As a captain of the industry, I feel that I should show you the respect that you deserve. What kind of respect does a bold-faced liar deserve?
You state that ``there is no conflict of interest because we never submitt our coins to PCGS for grading.'' If by that you mean that you have not, currently do not, and will not submit coins to PCGS for grading, and that the ``we'' includes everyone reasonably involved in this potential comflict of interest, then I say that I do not believe you.
I know with 100% certainty that B&M and Kingswood has submitted, currently do submit, and perhaps will continue to submit coins to PCGS. And, they are corporate entities of CU.
How much stock should I place in your unsubstantiated and unbelievable statement that you are never your own customer?
Also, your comment about the NGC/Heritage relationship is, IMO, not on point. Heritage is not a member entity of the CS family of companies. I was once told by a Heritage officer that they own stock in both NGC and PCGS because they like both companies, and that they wished to avoid the appearance of bias. (I don't know if HCC stills owns stocks of both, or when they sold off the shares.)
Mr. Hall, I challenge you to back up your words on this matter and place real, verifiable controls in place. Your word is not good enough. Without controls in place, how do we know that a future instance will not occur where a high-level officer of CU won't be tempted to exert influence on PCGS for his own financial benefit?
EVP
How does one get a hater to stop hating?
I can be reached at evillageprowler@gmail.com
I don't think TDN was bashing B&M. I know for a fact that TDN likes B&M very much. TDN was just pointing out an inconsistency -- a bold-faced lie -- to DHall's statement. It could very well be that B&M is ethical, and they submit because that's what they're supposed to do. B&M have no control what grades they get, but PCGS/CU do control the grades that they (and every other submitter) get.
Remember that submittors to PCGS are NOT anonymous (like with submissions to ICG). This situation allows bias to happen much more easily.
EVP
How does one get a hater to stop hating?
I can be reached at evillageprowler@gmail.com
I am an analyst at a small investment bank, and I can assure you that there is no interaction or conflict of interest between the research group and the investment banking group. Do you believe me? Based on everything in the news lately, do you think the market believes me?
TDN -- I was not taking issue with you.
Oreville...you haven't called me lately...I do something to to upset you?
EVP: What am I missing here? Let's assume Kingswood submits auction coins to PCGS, as we all believe they might. SO, WHERE IS THE PROBLEM? Those Kingswood coins BELONG TO THE CONSIGNORS. In fact, until the coin is actually sold in that auction, the consignor can buy back his own coin, perhaps in the new, higher holder if the coin were to happen to upgrade. Kingswood is submitting coins owned by collectors and dealers - they are not CU's coins and I fail to see where DH's statement is inaccurate or misleading?
Now, let's say I want to consign my collection of Wash quarters to a Kingswood sale. I have (2) choices - submit the set for upgrade review myself before I even talk to Kingswood, or allow them to do it for me, which I might prefer because I am paying them a commission to sell my coins anyway - let them earn it by doing all the work for me. Now, Kingswood sends in my coins to PCGS for me for upgrade review and some work and some do not. NOW, WHERE IS THE CONFLICT OF INTEREST?
I will have things to say both pro and con PCGS, but on the issue of Bowers or Kingswood submitting CONSIGNED auction coins for grading, I fail to see anything here to talk about personally. Again, what am I missing?
By the way, the conflict issue or the appearance of conflict is indeed VERY complicated. Not easy. I want to make it clear that I am not attacking YOU personally nor upset at you but am attacking the structure of CLCT as it exists. For you to really remodel CLCT based on our posts would be very visionary and will probably give you true immortality
in our hobby for the next 100 plus years which most of us can only dream about.
You have a unique opportunity to show the diamond industry, the stock market industry that you can take the bull by the horns and take CLCT to a new level and elevate the coin hobby to a level that is even higher than the stock market. You started your task back in 1986 but you now have to finish it.
You do just that and mark my word, the stock of CLCT will triple in value in 1 month.
It would be an exciting project for you to embark on just like Marcus Aurelius, Emperor or Rome wanted to do but realized too late in his life that the Republic of Rome had to be restored.
Don't wait until you are too old to do what is right.
<< <i>the stock of CLCT will triple in value in 1 month. >>
Please excuse my bad joke as I couldn't resist.
So the stock value might crack a dollar?
Seriously, though, I think if some of the suggestions we are making find their way into policy, it can have a big effect on the company and industry.
First, after a few instances like Legend's that I described above how long would it take for the rumor to get around that you'll get good grades by consigning to a CU auction company? That's a more subtle benefit, but it's a conflict nonetheless.
Second, if PCGS allows submissions by its subsidiaries of any kind, how can it be categorically stated that they never grade their own coins? What process is in place to prevent a salesman who needs to make a living from lumping a few CU owned coins in with a consignment submission? I am NOT saying that I know or suspect that this occurs, but a simple statement that it does not occur doesn't go very far.
I like and respect PCGS - but feel these things need to be addressed.
But, David, in his post stated in part "If we buy a PCGS coin that looks like it has upgrade potential, we put it in a B&M or Kingswood auction and hope at least two bidders will make sure the coin brings a premium price. We do not use any type of PCGS grading for coins we own."
So, David Hall Rare Coins does indeed consign to Kingswood and Bowers' sales. And, even if none of those coins are submitted or resubmitted to PCGS for grading (I absolutely believe David on this, by the way), David Hall coins are competing against coins consigned by others, including competitors of his, for bidders' dollars . This is but one of many potential conflicts. And, as stated by others, just the appearance for potential conflicts of interest should be avoided.
If the post by TDN is correct with regard to how the coins he submitted for crossover were denied and how these same coins were submitted for crossover by B&M were crossed, then we have a possible problem. First, the information on policy enunciated by DH seems (is) discrepant with practice and there is a real question of of fairness and objectivity based on submission. Now the latter experience of TDN may be chance but it certainly raises concerns. Secondly, Mr Hall has stated that it is their policy to leave all submitted raw coins to be sold as raw. I have always wondered if that were true, as I imagined the logical approach was to certify raw coins to max the profit on sale for the consignor and auction house and those that remain raw are for good reason. Mr Hall says otherwise but the posts on the trhead assert he is misinformed.
I hope David Hall responds to the apparent discrepancies in what CLCT retail, auction and wholesaling subsidiaries do and do not do with regard to the submission of coins for grading to PCGS.
Someone is wrong here!!!!!!!!!
Mr Hall needs to read these posts, check with his operations officers and re-state what goes on! I don't want to drive David Hall off the forum or even to be frustrated by it's presence but clarity and integrity are essentials for auditors, auction houses and certifying companies!
<< <i>I will have things to say both pro and con PCGS, but on the issue of Bowers or Kingswood submitting CONSIGNED auction coins for grading, I fail to see anything here to talk about personally. Again, what am I missing? >>
Even my small, non-lawyer brain can see the potential conflict of interest in this one. (Note emphasis on "potential" - none of us really know).
If a division of CU submits coins for upgrade, even coins they do not own, and said coins do indeed upgrade they increase their earnings because the coins realize a higher price at auction, thus increasing the fees they derive from the sale.
Russ, NCNE
I generally eschew these PCGS/NGC bashing threads as well as any PCGS/NGC cheering threads. I do not care to denigrate or promote their respective businesses. I do not know whether Mr. Hall was being truthful when he said that DHRC and B&M do not submit their own inventory for grading. I sense that EVP and some others have a visceral distrust or even dislike for Mr. Hall, and I do not expect that that will change any time soon. Perhaps it is the frustration experienced by them and many others in the submission and cross-over process, perhaps it is deeper and more complex than that. But in truth I would rather not even delve into the source of their feelings. That is not the point of this thread or this post
I would simply like to make one point concerning the issue of whether it is a conflict of interest for B&M to send CONSIGNED coins to PCGS for grading.
As an auction house, B&M has an ethical obligation to obtain the best price for the consignor. Ethics aside, it is crucial to their business to obtain top prices, since they are competing with Heritage, Stacks, Goldberg etc for consignments at auction. The reality of the market place is that PCGS and NGC coins are more marketable and bring better prices overall than raw coins. Many collectors will not buy raw coins -- mail and internet bidders especially, but also many who are able to view the coins. Many other collectors will be reluctant to bid the "full value" of the coin that they would be willing to bid if it were in a holder. Yes, B&M does have raw coins in its auctions, and frankly I wonder why the owners do not submit them for grading themselves or have B&M do it for them.
Just my thoughts on the issue.
CG
<< <i>Frattlaw, Oreville, Placid...Thanks for the great posts. It's a complicated subject...more later. >>
... Yes it is very complicated, and unnecessarily so imo, which is why there are so many disbelievers to the concept of PCGS, DHRC, B&M, and potentially others being seen as totally separate entities with no collusions or conflicts-of-interest. Establishing accepted and proven conflict-of-interest controls are imperative if PCGS ever wishes to remove this cloud of doubt firmly established in the minds of the knowledgable and astute numismatic community.
2) I now have information that, while Heritage sold its shares a while back, the owners of Heritage do indeed own stock in NGC. I have no information whatsoever as to whether this is a conflict of interest. It appears that Heritage owns shares in CU as well.
3) The fact that Legend was 0/12 on PQ coins submitted for crossover probably falls under yesterday's topic of the falling crossover rate. Even B&M was not as successful as I would have expected.
4) B&M does have an obligation to the consignor to maximize the price realized. I have the utmost respect for B&M and would never accuse them of any impropriety.
And lastly - I would like to see PCGS become the best grading service it can be. In my opinion, this would be as the result of refocusing on the customer and consistency - not by playing the "I'm tighter than you are" tit for tat game. NGC is a fine company also and the industry is best served by having two strong grading companies in competition for the collector's loyalty.
There is a clear conflict in the situation you described.
Suppose that for consigners (customers) Bowers will submit coins to PCGS. And, suppose that PCGS gives those Bowers submitted coins favorable treatment. Then, I as a customer have a clear incentive to prefer a Bowers auction to a competitors (ie I get the additional benefit of possible upgrades). This is a clear possible conflict. The conflict can only be removed if DHRC and Bowers agree not to submit coins for themselves, their customers, or anyone else.
An alternative approach might be for remove the "fiction" of independence. Why not just say that PCGS is owned by David Hall and other dealers who also own DHRC and Bowers and that it is not independent. I have always felt that PCGS represents dealer interests, and I believe most people believe that as well. Even representing dealers, PCGS has established its value. The PCGS grade will then be (is) viewed as the dealer communities view of the grade of the coin. Don't forget that dealers have to buy them as well as sell them. I for one would have no problem with a fully disclosed conflict.
Greg
???????????
i just don't understand how any conflict, not even going the route of the "mere appearance of a conflict," can be condoned. to be able to trust pcgs as an independent grading service they must have no favorable relationship with any party who submits, whatsoever, as simple as that.
it's a testament to the quality of the bulk of the grading that pcgs has done to this point in time that they have been able to guarantee their grades, and satisfy, to my knowledge, many if not most or all, people unsatisfied with a pcgs graded coin.
i have read mr. Hall's responses to the numerous questions fired at him by the board and have been generally impressed with his answers. (i, for one, agree that coins in pcgs slabs usually have "the look" that is often not present on coins graded the same by other services, even ngc. in other words, i don't have a problem keeping the pcgs registry solely the pcgs registry, nor do i have a problem with not a whole heck of a lot of coins from ngc crossing over.)
the conflict of interest question, however, is as stated, much more complex than the others and i look forward to a much better articulated response.
Typetone: Yes, if PCGS was committing intentional fraud, then you have a point as to a possible conflict
Listen, IMHO, for every coin Bowers crossed before the auction, there is a coin that Bowers failed to cross that an upgrader gobbled up in the sale and upgraded himself later. A discussion concerning a dozen NGC coins in the sceme of things (for which only 1/2 worked when all were expected to once Bowers got a hold of them) is virtually meaningless in this discussion, as far as I am concerned. Back to the big picture.
As stated, the auction house has a ethical obligation to treat its consignors in good faith and use fair dealing. If Bowers advises a collector to submit a coin for upgrade and it works, the collector generally gets 85% of the upgrade value. Bowers gets 15% in the form of a commission - yes. If this is the type of "technical conflict" a few board members don't like and believe is harmful to the hobby, then perhaps a petition should be organized banning Bowers from assisting every widow and orphan that comes to them with their raw (and older holdered) coins to auction to off. After all, the savvy dealers already know to ask Bowers to submit the coins or submit them without Bowers. Compelling Bowers to cut off submission services to PCGS would likely only harm collectors the way I see it.
Wondercoin.
In fact they have made it point to let people know they want to deal in NGC as well. And they even have begun attending NGC's trade and grade shows and are active submitters there. They do not like being stuck in the PCGS only sterotype.
I don't know all the internal workings, but I'm sure when a major collection comes through (at ANY auction house) whether its PCGS OR NGC the grading companies know about it. And then its up to THOSE grading companies to do whatever.
Now, with TDN Evergreen coins, I don't really know what happened. My guess is they went in with a very large submission that may have caught someones attention. I absolutely felt ALL of those coins should have crossed. But then they got them back, I called the graders and I heard lame excuses like: we didn't like the depth of the toning, or it wasn't for our tastes. Heck, either the coin makes the grade or it doesn't! At the time, I the way the graders were acting it did not sound like they had known who's coins they were. But you can never be 100% sure with those guys.
Laura Sperber
lsperber1@hotmail.com
Laura Sperber
lsperber1@hotmail.com
JUST SAY NO TO WANNABES! They lurk and prey on unwitting collectors in chatrooms!
Just my 2 cents
Michael
MW Fattorosi Collection
As for the conflict of interest, it should be removed. I don't care how careful they are the POTENTIAL for abuse is there and that should be enough of a concern. Any auditor would agree.
No wonder he doesn't post here much.
If I owned the company and you guys treated me like that I would shut this board down so all you could go back to the rcc board.
EVP
How does one get a hater to stop hating?
I can be reached at evillageprowler@gmail.com
I really an suprised someone actually wrote a statement like that.
Anyway, wouldn't the Registry also be a form of a conflict? Afterall since DHRC deals in hard to find coins and the registry is slanted by those types of coins and doesn't Mr. Hall have a pretty strong hand in the registry. Well, does 1+1+1=4!?!?
The wohle set up seems to be a conflict and I seriously doubt the original post in the thread.
Wondercoin: It is a direct conflict of interest if a Kingswood coin that upgrades (through its own service). Kingswood would directly benefit from gaining a bigger commision from both the buyer and the seller. It wouldnt matter who owned the coin, would it? C'mon.. it IS a DIRECT conflict.
And that IS the BIG PICTURE!! How could you even come close to disputing there is no conflict for your example?
Just my 25 cents worth!!
WWQ
I would not be too concerned about a delay of a few days on this. Better that than a hasty response. I would prefer a well thought out plan for the future. Obviously, we cannot be privy to many details except of a general nature until the general public is advised at the same time.
I do recognize, however, that there are many other issues that might be discussed on the subject of CU avoiding conflicts with its current formation apart from the auction submission issue. Wondercoin
Suppose for example you purchase a dozen rare and expensive coins, graded in one companies slabs. You submit them to another company for possible upgrades and not one of them does. You then sell them and much to your surprise you see them in an auction by a company owned by the same shareholders that own the second submission company. Lo and behold 6 of those coins upgraded. Wow you say to yourself, how did that happen. Upon further investigation you find out that the auction company, who is owned by the same shareholders resubmitted the coins themselves. You are now asked, do you think that there is the appearance of a conflict of interest?
You can argue around the question by saying well the consignor deserves to be compensated for the full value of the coins. That doesn't remove the appearance of a conflict of interest, even if no one intentionally or knowingly did anything remotely wrong. The end result is the first buyer left a considerable amount of money on the table, ask him or her if there is an appearance of conflict.
Now, one would say well there is always room for upgrades in, the so-called PQ coins, and I would suggest that most of the collecting community would buy into this statement. However if you have one of the prinicipal shareholders and founder of the grading company publicly stating this opinion: (excerpted from Scott A. Travers, Coin Collector's Survival Manual page 85)In a letter to PCGS dealers, Hall writes: ..."I feel the concept of premium quality is nothing more than an illusion. I am 100% convinced that there is not a man alive today who can consistently and accurately grade coins with more precision than the eleven-point MS-60 to MS70 scale. I simply do not believe it is possible to differentiate with any degree of consistency between MS-64 and "MS-64PQ" coins. The public will simply not buy that concept long term. It will be seen as another scam--another way to manipulate grading standards--to buy for $250 and sell for $500."
What CLCT or any other company has to do is weigh any potential appearance of conflicts of interest with what is the best business practices to maintain customer loyalty and of course keep themselves out of court (unfortunately always an over-riding concern now a days). To weigh this one has to judge the likelihood of an appearance happening and comparing it to the potential harm on its reputation.
Right or worng.. all I mentioned was that they was a direct conflict, which there is. I took your first post as saying that you didnt think there was a conflict.
I agree that it hurts the average collector or the uninformed.
WWQ
WWQ: I am not sure how you could have concluded that I stated there was entirely no conflict whatsoever, when I personally acknowledged the possibility of a technical conflict in my earlier post.
One final point, when one discusses the issue of disclosed (potential or real) "conflicts" involving an auction company, are we then simply talking about moral issues rather than legal issues (any non-retired lawyers out there?) Have you ever read the fine print in the catalog in those first few pages prior to the auction lots for sale?
Anyway, all the points on this subject have been well presented (especially IrishMike's) and done so in a respectable manner, which is the most important thing.
ps
I bet you couldn't hit a homer with my fastball.
I hate it when you see my post before I can edit the spelling.
Always looking for nice type coins
my local dealer
<< <i>I accept Mr. Hall at his word. >>
Wow! Are you really a lawyer? I never accept anything that someone tells me @ face value. Especially when someone is trying to explain a potential problem. Lesson #1 from law school as well as lessons #1-10 as a new lawyer.
If you are a lawyer, you must be blessed to have the most honest and upfront clients ever known to our profession.
Lucky you!
Michael
There'd also need to be another guide for expected retail selling prices used to determine what they are willing to advance you if you consigned coins to them (say for the B&M division). This way there would be a guide as to the estimated selling price at auction (i.e. a retail guide) that they would use as a basis to determine the amount of the (50% e.g.) advance they offer to consignors.
The problem is all the wholesale price info & dealer networks are PURPOSELY a guarded secret that is DESIGNED to keep info from MOST buyers/sellers. Thereby institutionally depriving people of the "fairest" true market price. This industry will NEVER reach it's FULL potential until ALL the info is FULLY transparent AND there are willing buyers of ANYTHING (or at least all PCGS slabs for a start) at SOME particular stated price.
As some have said: there exists a unique opportunity to revolutionize this industry for someone with the courage, ability, integrity, and resources that will truly be a legacy all will be required to admire and respect - we can only watch & wait.
Will they run the corporation at arms length? One hopes so but, large sums of money are involved over time and there is no assurance that this "honor system" will hold in the future. Many collectors would feel more comfortable about this issue if CU and PCGS were totally separate entities.