I'm thinking it's only OK when the dealers do this type of behavior. Then jack the price way up, sell it to the low-life collectors, and wink at they buddy and say..... "thanks dude, I owe ya one."
Please... Save The Stories, Just Answer My Questions, And Tell Me How Much!!!!!
<< <i>I'm thinking it's only OK when the dealers do this type of behavior. Then jack the price way up, sell it to the low-life collectors, and wink at they buddy and say..... "thanks dude, I owe ya one." >>
<< <i>I'm thinking it's only OK when the dealers do this type of behavior. Then jack the price way up, sell it to the low-life collectors, and wink at they buddy and say..... "thanks dude, I owe ya one." >>
Steve: It's not OK when ANYONE does it --dealers or collectors! This thread isn't about us (coin dealers) against them (collectors) -- it's a question pertaining to auction ethics (or the lack thereof), which should apply to ALL of us.
<< <i>I'm thinking it's only OK when the dealers do this type of behavior. Then jack the price way up, sell it to the low-life collectors, and wink at they buddy and say..... "thanks dude, I owe ya one." >>
Steve: It's not OK when ANYONE does it --dealers or collectors! This thread isn't about us (coin dealers) against them (collectors) -- it's a question pertaining to auction ethics (or the lack thereof), which should apply to ALL of us.
Mike >>
Well, excuse me. Just curious, did the collector have you consign the coins to auction for him/her? Did you have a financial interest in this? again, just curious is all.
Please... Save The Stories, Just Answer My Questions, And Tell Me How Much!!!!!
IMO, the only way it would be collusion is if there are no other bidders in the picture, i.e. if all possible bidders "in the room" controlled the bidding. Two or three bidders can make all the grand plans they want, but as long as others have access to the auction, the seller is still guaranteed a fair auction.
In theory Section 1 of the Sherman Act applies to any sort of price agreement. Of course, if two people with my buying power agreed to limit our bids, in practice I think the Justice Department would probably decline to prosecute. But in theory, at least, it could prosecute regardless of how many other bidders were still bidding.
<< <i>I'm thinking it's only OK when the dealers do this type of behavior. Then jack the price way up, sell it to the low-life collectors, and wink at they buddy and say..... "thanks dude, I owe ya one." >>
Steve: It's not OK when ANYONE does it --dealers or collectors! This thread isn't about us (coin dealers) against them (collectors) -- it's a question pertaining to auction ethics (or the lack thereof), which should apply to ALL of us.
Mike >>
Well, excuse me. Just curious, did the collector have you consign the coins to auction for him/her? Did you have a financial interest in this? again, just curious is all.[/
Steve: Are we a little sensitive this evening?
The answer to your question is NO -- I didn't consign the coins for the collector, nor did I sell all of them to him (although I did buy $300K worth of them in the sale WITHOUT colluding with anyone). Anyway, what in the heck does that have to do with the price of tea in China? This was an ethics question, plain and simple. Nothing more and nothing less -- no hidden meaning or agenda. I was just putting a legitimate question on the table for discussion.
<< <i>the thought that collusion in a case like this is illegal sounds pretty stupid to me. in essence, what you're saying is that if you've ever sat in an auction room (and i'm referring to the OP and any other respondents who feel it's unetheical and illegal) with anyone and agreed to let your buddy win a coin by not bidding on it you are guilty as charged. i've done that and it's safe to assume most everyone else has to some degree, so we are all lawbreakers and need to turn ourselves in???? that's preposterous. even more ridiculoius is the thought of three graders at a TPG like NGC conferring on a coin's grade and deciding that maybe it should be a PR66 and not a PR67 because the latter is too expensive and might cause the company to incur a "gaurantee" loss someday. hey, that's another scenario that i know never takes place.
if a consignor is too stupid to place a reserve or buyback on items and he gets "colluded" while he also gets "clobbered" then it's his own fault for being stupid or cheap. >>
"what you're saying is that if you've ever sat in an auction room (and i'm referring to the OP and any other respondents who feel it's unetheical and illegal) with anyone and agreed to let your buddy win a coin by not bidding on it you are guilty as charged."
Forgive me if I'm taking this out of context but: This is not the same thing at all.
Here you are just deciding not to bid, for whatever reason. NOT deciding before hand you will buy this, and he can buy that.
I do feel the OPs scenario is unetheical. I would also ask for more info. Like is the auction house involved in the collusion in any way? For instance, calling the only 3 - 4 people in the country they think will be most interested in the items and setting it up?
Do you (the seller) have SHILLS set up to combat this supposed collusion? (Just as bad in my book)
(Old man) Look I had a lovely supper, and all I said to my wife was, “That piece of halibut was good enough for Jehovah”.
(Priest) BLASPHEMY he said it again, did you hear him?
Collusion seems illegal to me in that it essentially is a verbal bilateral contract .... "I won't bid lot 1 provided you agree not to bid lot 2" .... and therefore is price fixing. Now a fellow specialist saying he won't beat you silly with bids on a coin because he already has one and sees you are bidding and don't have one, I see no ethical or legal issues.
All of this auction meshigass hurts the hobby. I liked the old sealed bid sales. I know they can be abused too but not as easily. Problem is that you hardly see them much and not with quality coins.
I feel like this happens almost everytime I consign to a major Auction house......
Not a good scenario at all and call me dumb but I never even considered this even when I have knowingly bid against fellow board members for the same coins on Ebay.....
Any colluding that would be going would be at the highest levels of the auction house.
Insider trading of information...unethical,illegal,unfair.Good luck to anyone who tries to prove this kind of activity goes on since the good 'ole boy club has got to have a strict code of silence.
Whoever is careless with the truth in small matters cannot be trusted with important matters.
If it is illegal for two collectors to verbally agree to back off each other's favored lots, then consider this scenario. Suppose collecor A agrees to back off and then doesn't, causing collector B to pay much more than intended. Can collector B sue collector A for breaking a contract? Somehow I doubt it.
You can't have it both ways. If you don't recognize the collusion as a contract, then how can you call it illegal?
"No Billy Bob, my conscience, and the Law, says that I Must bid against you on that '70-cc, and I prefer you uphold the same standard with respect to the lots I have expressed a need for. Mikey, Tad, Max, that goes the same for you fellas too. I just think this whole discussion is dangerously flirting with making us into a Racket."
We're all born MS70. I'm about a Fine 15 right now.
I've personally seen this happen in small auctions with small-time coin dealers - I'd imagine that it also happens with large auction houses. If you go to small/local collectibles auctions with a lot of regulars, you can clearly see the anger on the coin dealers faces when some new-comer dares to bid higher than them on an auction.
Collusion is illegal and unfair as well. But the casual conversations between hobbyists or friends should not be considered collusion imo. I recall back in 1988 when the Norweb 1867-s quarter (MS63 then) came up for sale. I already had a MS66 but wanted the 2nd finest known as well. A set collector also wanted the piece and contrary to my own interests, I did not bid against him. There was no discussion, I just told him I wouldn't bid. No quid-pro-quo here. He got the coin for his set and quite cheaply I might add (the next decent piece he would have to had waited for Eliasberg in 1996.....which also went dirt cheap with us two not there). I bid on other coins in that Norweb but in hindsight, the 67s- was a far better deal than the misc other coins I ended up with. I should have bought the 67-s.
I recall a MS67 old holder NGC tone legend half dime in a summer Long Beach sale a couple of years back that looked very PQ+ to me. I had $3000 to "bid" on it. When it came up it opened at $1500 and promptly stopped dead. Even a decent MS67 was worth $2000+ at the time. As the micro-seconds ticked by I figured the coin must be AT or there would be more action. I did not bid. Later on I found out the coin was layed off by a group of dealers who felt it was a 68 shot and wanted to split a sure profit rather than run everyone up. I'm sure this happens a lot, in every major auction. It's the dealer collusion that worries me. And in the high end type arena it only takes 2 or 3 bidders to lay off to make a huge difference in the end price. For years I worried about consigning my best coins someday for fear that a couple of dealers would collude to keep the prices to their satisfaction. It's typically the dealers who walk away with the prizes at auction (or dealers bidding for clients). To those that think missing one or two key floor bidding dealers makes no difference think again. The internet or a huge customer list won't make up for that. Just the absence of a Martin Paul in any 1988-1990 auction would have meant you got less for your collection choice or gem gold/silver/nickel/copper type coins. I've always chuckled that major auction houses should pay expenses to send someone like Martin to every auction. Or they could pick out a specialist or top collector to bid on the auction in general on their own account to keep the prices honest. Everyone wins - the house, consignor, and the collector. Little would slip by. And by keeping it quiet they wouldn't tick off the usual cadre of bidders.
A few years ago I was bidding on a very nice MS66 bust half. I dropped out very early knowing that the dealer who was bidding was going to pay substantially more. Did I break the law by not bidding? The dealer and I never had a discussion. Another time I dropped out early hoping to purchase the coin from the winning dealer. I had no idea if that would work. But it did, and I got the coin maybe for slightly less than if I had bid.
As far as being "stupid" for not setting high enough reserves....sometimes it's very hard to determine what a coin will bring at auction. That's often why you go there in the first place, to get the big money well beyond sheet prices. By setting a smaller reserve you often get a smaller seller's commission as well. Maybe picking very high reserves works for bigger dealers who continually consign "stale" coins to auctions, but for a typical collector consignment, setting strong reserves might be a big mistake unless you have a pro handling your account to negotiate buy backs and other penalties.
I don't know about the legality of this but having something like that work would imply a pretty small market for those coins which, for a nice collection that you described, probably wouldn't be the case in reality - there would be plenty of bidders.
<< <i>I've personally seen this happen in small auctions with small-time coin dealers - I'd imagine that it also happens with large auction houses. If you go to small/local collectibles auctions with a lot of regulars, you can clearly see the anger on the coin dealers faces when some new-comer dares to bid higher than them on an auction. >>
Then I guess they need to "school" these new-comers aforehand eh?
It is indeed illegal and people in the numismatic business have been caught and punished for it.
Around 1990 a group of dealers attending the auction of the archives of the American Banknote Company (paper money) got together in a collusion ring in order to keep the auction prices low.
It took several years of govt. investigation but the end result was guilty pleas and heavy fines, at least one was for $120,000.
Well, moderation in all things seems to be the key. What is moderate? I guess we all have different definitions.
I think some people's answers in this thread seem more about it being illegal/immoral/wrong when it is other people up to it.
All this in an era when oil prices are manipulated, or seem to be, and the country suffering from collusion on a crazy level, and we are worried about some coins?
Love that Milled British (1830-1960) Well, just Love coins, period.
I learned very early in the game that some auction houses have "friends" that get special treatment. Years ago, I was consigning several coins to an auction house. The owner/consignment director was looking at my lots and assigning values for insurance. He received a phone call from one of his "friends". The person calling was asking "what are the reserves and what kind of money do I have to bid to get the coins." Unthoughful of my presence, the owner stated "you have to pay XXX, YYY, ZZZ to win the lots." and hung up the phone. The owner of the auction house had just given out consigner reserves!!! After that experience, I had first hand information of what goes on behind the scenes. I learned much, much more after years of viewing auctions from the back of the room.
Unless the auction houses are blocking non-dealer bidders, how could this be collusion? The dealers can decide amongst themselves which coin will be bid on by which dealer, but if I'm bidding on that coin, I could give a rat what they've decided on. I'll bid on it to my limit, which will probably ruin any plans to keep prices low.
To answer OP question, differently than previously answered here:
1. Illegal? Yes, as already established, with examples, in this thread. 2. Ethical?
A. No. Societal ethics drive legislation. Hence, the society we operate within is dictated by norms, mores and morals – all of which dictate legislation against price fixing and collusion.
(I intentionally do not address contention – often factual – that most legislation is not driven my ethics but instead is driven by special interest groups.)
B. Yes. Although illegal, price fixing and collusion is indeed quite common at auctions, not just in the numismatic community. Have you ever gone to a regular auction format for homes sold for tax liens or foreclosures? How about auctions for storage rental unit property where rent was not paid and collateral is being auctioned off?
At both of those regular types of auctions, a community of prospective buyers builds around the process. Those prospective buyers, typically and eventually, build a consensus and resultant working model which regularly distributes property at the lowest cost to the prospective buyers as a group, and thus individually.
For example, the tax lien buyers may work out a schedule where ‘Joe’ gets the winning bid this month and ‘Sally’ gets the winning bid next month. Same with rental auctions.
In BOTH cases, when a new prospective buyer arises at auction, the existing network will lock out the newbie by raising their bids artificially, ensuring the newbie does not win the bid and therefore discouraging future participation. The group will then work out a mechanism to reimburse the high bidder amongst them.
Since this type of activity is common and replicated across bourse floors and item types – this demonstrates that our societal and individual actions, mores, and ETHICS supports the activity.
<< <i> So why is blocking an eBay bidder not considered "restraint of trade"?
If I refuse to sell you a coin from a BS&T posting is that considered "restraint of trade?" >>
You are the seller, and have that right, knowing that you are possibly losing money blocking someone (like the guy on here that blocked me from bidding on his matte proof Lincolns)
But when a group of buyers makes the decisions who won't bid on your coins, it's stealing from you.
Frank Provasek - PCGS Authorized Dealer, Life Member ANA, Member TNA. www.frankcoins.com
<< <i>The person calling was asking "what are the reserves and what kind of money do I have to bid to get the coins." Unthoughful of my presence, the owner stated "you have to pay XXX, YYY, ZZZ to win the lots." and hung up the phone. The owner of the auction house had just given out consigner reserves!!! TRUTH >>
That's often given out as a courtesy so people don't waste their time doing research and placing a bid that won't even count.
Frank Provasek - PCGS Authorized Dealer, Life Member ANA, Member TNA. www.frankcoins.com
<< <i>If it is illegal for two collectors to verbally agree to back off each other's favored lots, then consider this scenario. Suppose collecor A agrees to back off and then doesn't, causing collector B to pay much more than intended. Can collector B sue collector A for breaking a contract? Somehow I doubt it.
You can't have it both ways. If you don't recognize the collusion as a contract, then how can you call it illegal? >>
Yes they can sue and, with sufficient evidence, win that suit. But that would be like robbers suing each other for unfairly dividing the loot from a heist, very stupid to have on public record.
Mikey, in this theoretical example the theoretical seller wouldn't per chance have agreed in a friendly manner with other buyers about certain lots at other auctions while he/she was building up his/her own collection now would they?
It is totally unethical in every case (to varying degrees, I suppose) and it is illegal criminal behavior in certain cases/situations. I've asked a couple people at Heritage about this in the past, and they claim they are aware it happens from time to time. They said they hate the practice for all the obvious and not-so-obvious reasons and are quick to take action if they get wind of it in time and can take steps to prevent it. But said it is almost impossible to prove and prosecute.
<< <i>in this theoretical example the theoretical seller wouldn't per chance have agreed in a friendly manner with other buyers about certain lots at other auctions while he/she was building up his/her own collection now would they? >>
Awe yes, I am sure in the OP example the "collectors" were best buddies and behaved in a nice and friendly manner. Now did they explain to the consigner how much they screwed him out of? Breaking laws always involve deception. There is no shortage of people who believe illegal behavior is ethical in their own world, the largest group of these is in prison.
Robert Scot: Engraving Liberty - biography of US Mint's first chief engraver
Ethically, this is a no brainer. Not certain that it is criminal, though. Most of the laws cited earlier pertain to the opposite side of the transaction, e.g. price fixing. Then again, I believe conspiracy is a stand alone crime where the underlying acts need not, in and of themselves, constitute a crime. I agree that proofs may be tough, unless one or more of the co-conspirators is careless with sharing the plan.
I have had some hard core collectors and dealers threaten me (so to speak) that if I put my collection with an auction house and I don't sell my best stuff to them private treaty they will collude amongst themselves to keep the prices down. Next time they are after me I am going to educate them too.
Thanks again for all the responses. Obviously I don't agree with all of them but appreciate differing viewpoints nonetheless. I'm sorry that I can't provide the details here, but suffice it to say, it was definitely premeditated and well orchestrated -- not just a couple of buddies casually saying -- "gee, I like that coin and it would be nice if you didn't bid on it too." This particular incident went far beyond that.
On a tangent: Consider a specialist dealer is representing a consignor for a fee. Since it is a niche specialty, he/she also often represents others in the specialty who respect his/her knowledge. This dealer also then represents a bidder. The bidder instructs him to bid according to what the dealer thinks the coin lot is honestly worth. The result is the bid and final hammer are high and that also means fees to the dealer are maximized. Just theoretical. I know we discussed dealers who represent multiple clients chasing the same coin in the past but also wondered for some time about one who might play both sides of a fence. Where would the loyalty be? Whose best interest would the dealer represent, the consignor or the bidder? Should such a dealer refrain from representing anyone's interest in bidding coins in an auction for which he/she worked on the consignment? Might be worth discussing. Not sure how prevalent it is but would think it does occur.
<< <i>On a tangent: Consider a specialist dealer is representing a consignor for a fee. Since it is a niche specialty, he/she also often represents others in the specialty who respect his/her knowledge. This dealer also then represents a bidder. The bidder instructs him to bid according to what the dealer thinks the coin lot is honestly worth. The result is the bid and final hammer are high and that also means fees to the dealer are maximized. Just theoretical. I know we discussed dealers who represent multiple clients chasing the same coin in the past but also wondered for some time about one who might play both sides of a fence. Where would the loyalty be? Whose best interest would the dealer represent, the consignor or the bidder? Should such a dealer refrain from representing anyone's interest in bidding coins in an auction for which he/she worked on the consignment? Might be worth discussing. Not sure how prevalent it is but would think it does occur. >>
John: There's no problem whatsoever provided the dealer representing the bidder is not involved in collusion to hold the prices down. If the dealer representing the bidder also represented the consignor (by assisting him with consignment arrangements, etc. for a fee) -- he would not only be an unethical creep to participate in collusion, but he would be an idiot as well because he would be cutting his own throat. I think that came out right ...
Great thread Mike. Glad to see you stepped up and bought coins. If a coin does not have a layer of buyers, this kind of strategy can work. What also works well, among bidders seated at the sale, is is the "I have 12K on lot X, what do you have ?". Again, the coin has to command more buyers on its own.
Gotchya, Mike. What I am getting at is the general problem that a dealer faces representing both buyers and sellers. As an example, consider a quality consignment where the house will go hammer plus 7. I don't do this but will say the representing dealer asks for 3% of the 7% for himself. Now there is a certain coin in the group that sheets at $40K in 65 but everyone who sees the NGC 65 knows is a PCGS 64 and is worth $25K max. Now that dealer is representing another client as a buyer. He stands to make 3% of the bid (not sure if that is customary, fill in your own number) from him if he wins. Two bidiots who didn't see the coin are raising it up on eBay bids. Realizing the personal potential, the dealer bids up and wins the coin for his buyer. I would be very surprised if this doesn't happen, at least in part, especially from the more fly-by-night guys. I wonder how many of these representatives always look out 100% for the interests of their clients. I suppose the survivors must but don't know in general.
Comments
<< <i>I'm thinking it's only OK when the dealers do this type of behavior. Then jack the price way up, sell it to the low-life collectors, and wink at they buddy and say..... "thanks dude, I owe ya one."
<< <i>I'm thinking it's only OK when the dealers do this type of behavior. Then jack the price way up, sell it to the low-life collectors, and wink at they buddy and say..... "thanks dude, I owe ya one."
Steve: It's not OK when ANYONE does it --dealers or collectors! This thread isn't about us (coin dealers) against them (collectors) -- it's a question pertaining to auction ethics (or the lack thereof), which should apply to ALL of us.
Mike
Visit Our Website @ www.numisvision.com
Specializing in DMPL Dollars, MONSTER toners and other Premium Quality U.S. Coins
*** Visit Mike De Falco's NEW Coin Talk Blog! ***
<< <i>
<< <i>I'm thinking it's only OK when the dealers do this type of behavior. Then jack the price way up, sell it to the low-life collectors, and wink at they buddy and say..... "thanks dude, I owe ya one."
Steve: It's not OK when ANYONE does it --dealers or collectors! This thread isn't about us (coin dealers) against them (collectors) -- it's a question pertaining to auction ethics (or the lack thereof), which should apply to ALL of us.
Mike >>
Well, excuse me. Just curious, did the collector have you consign the coins to auction for him/her? Did you have a financial interest in this? again, just curious is all.
Charged in U.S. District Court under the Sherman Act:
Actual charges per DOJ
1/2 Cents
U.S. Revenue Stamps
In theory Section 1 of the Sherman Act applies to any sort of price agreement. Of course, if two people with my buying power agreed to limit our bids, in practice I think the Justice Department would probably decline to prosecute. But in theory, at least, it could prosecute regardless of how many other bidders were still bidding.
<< <i>
<< <i>
<< <i>I'm thinking it's only OK when the dealers do this type of behavior. Then jack the price way up, sell it to the low-life collectors, and wink at they buddy and say..... "thanks dude, I owe ya one."
Steve: It's not OK when ANYONE does it --dealers or collectors! This thread isn't about us (coin dealers) against them (collectors) -- it's a question pertaining to auction ethics (or the lack thereof), which should apply to ALL of us.
Mike >>
Well, excuse me. Just curious, did the collector have you consign the coins to auction for him/her? Did you have a financial interest in this? again, just curious is all.[/
Steve: Are we a little sensitive this evening?
The answer to your question is NO -- I didn't consign the coins for the collector, nor did I sell all of them to him (although I did buy $300K worth of them in the sale WITHOUT colluding with anyone). Anyway, what in the heck does that have to do with the price of tea in China? This was an ethics question, plain and simple. Nothing more and nothing less -- no hidden meaning or agenda. I was just putting a legitimate question on the table for discussion.
Mike
Visit Our Website @ www.numisvision.com
Specializing in DMPL Dollars, MONSTER toners and other Premium Quality U.S. Coins
*** Visit Mike De Falco's NEW Coin Talk Blog! ***
<< <i>Are we a little sensitive this evening? >>
I'm not....
<< <i>
<< <i>Are we a little sensitive this evening? >>
I'm not.... >>
I'm glad
Mike
Visit Our Website @ www.numisvision.com
Specializing in DMPL Dollars, MONSTER toners and other Premium Quality U.S. Coins
*** Visit Mike De Falco's NEW Coin Talk Blog! ***
<< <i>the thought that collusion in a case like this is illegal sounds pretty stupid to me. in essence, what you're saying is that if you've ever sat in an auction room (and i'm referring to the OP and any other respondents who feel it's unetheical and illegal) with anyone and agreed to let your buddy win a coin by not bidding on it you are guilty as charged. i've done that and it's safe to assume most everyone else has to some degree, so we are all lawbreakers and need to turn ourselves in???? that's preposterous. even more ridiculoius is the thought of three graders at a TPG like NGC conferring on a coin's grade and deciding that maybe it should be a PR66 and not a PR67 because the latter is too expensive and might cause the company to incur a "gaurantee" loss someday. hey, that's another scenario that i know never takes place.
if a consignor is too stupid to place a reserve or buyback on items and he gets "colluded" while he also gets "clobbered" then it's his own fault for being stupid or cheap. >>
"what you're saying is that if you've ever sat in an auction room (and i'm referring to the OP and any other respondents who feel it's unetheical and illegal) with anyone and agreed to let your buddy win a coin by not bidding on it you are guilty as charged."
Forgive me if I'm taking this out of context but: This is not the same thing at all.
Here you are just deciding not to bid, for whatever reason. NOT deciding before hand you will buy this, and he can buy that.
I do feel the OPs scenario is unetheical. I would also ask for more info. Like is the auction house involved in the collusion in any way?
For instance, calling the only 3 - 4 people in the country they think will be most interested in the items and setting it up?
Do you (the seller) have SHILLS set up to combat this supposed collusion? (Just as bad in my book)
(Priest) BLASPHEMY he said it again, did you hear him?
That is absolutely true. Thank you, Andy, for making the point.
All of this auction meshigass hurts the hobby. I liked the old sealed bid sales. I know they can be abused too but not as easily. Problem is that you hardly see them much and not with quality coins.
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member
Whoever is careless with the truth in small matters cannot be trusted with important matters.
Ummmmm no it is not legal and certaintly not fair. It is considered restraint of trade and is illegal.
Steve
Not a good scenario at all and call me dumb but I never even considered this even when I have knowingly bid against fellow board members for the same coins on Ebay.....
Insider trading of information...unethical,illegal,unfair.Good luck to anyone who tries to prove this kind of activity goes on since the good 'ole boy club has got to have a strict code of silence.
Whoever is careless with the truth in small matters cannot be trusted with important matters.
You can't have it both ways. If you don't recognize the collusion as a contract, then how can you call it illegal?
"No Billy Bob, my conscience, and the Law, says that I Must bid against you on that '70-cc, and I prefer you uphold the same standard with respect to the lots I have expressed a need for. Mikey, Tad, Max, that goes the same for you fellas too. I just think this whole discussion is dangerously flirting with making us into a Racket."
I recall a MS67 old holder NGC tone legend half dime in a summer Long Beach sale a couple of years back that looked very PQ+ to me. I had $3000 to "bid" on it. When it came up it opened at $1500 and promptly stopped dead. Even a decent MS67 was worth $2000+ at the time. As the micro-seconds ticked by I figured the coin must be AT or there would be more action. I did not bid. Later on I found out the coin was layed off by a group of dealers who felt it was a 68 shot and wanted to split a sure profit rather than run everyone up. I'm sure this happens a lot, in every major auction. It's the dealer collusion that worries me. And in the high end type arena it only takes 2 or 3 bidders to lay off to make a huge difference in the end price. For years I worried about consigning my best coins someday for fear that a couple of dealers would collude to keep the prices to their satisfaction. It's typically the dealers who walk away with the prizes at auction (or dealers bidding for clients). To those that think missing one or two key floor bidding dealers makes no difference think again. The internet or a huge customer list won't make up for that. Just the absence of a Martin Paul in any 1988-1990 auction would have meant you got less for your collection choice or gem gold/silver/nickel/copper type coins. I've always chuckled that major auction houses should pay expenses to send someone like Martin to every auction. Or they could pick out a specialist or top collector to bid on the auction in general on their own account to keep the prices honest. Everyone wins - the house, consignor, and the collector. Little would slip by. And by keeping it quiet they wouldn't tick off the usual cadre of bidders.
A few years ago I was bidding on a very nice MS66 bust half. I dropped out very early knowing that the dealer who was bidding was going to pay substantially more. Did I break the law by not bidding? The dealer and I never had a discussion. Another time I dropped out early hoping to purchase the coin from the winning dealer. I had no idea if that would work. But it did, and I got the coin maybe for slightly less than if I had bid.
As far as being "stupid" for not setting high enough reserves....sometimes it's very hard to determine what a coin will bring at auction. That's often why you go there in the first place, to get the big money well beyond sheet prices. By setting a smaller reserve you often get a smaller seller's commission as well. Maybe picking very high reserves works for bigger dealers who continually consign "stale" coins to auctions, but for a typical collector consignment, setting strong reserves might be a big mistake unless you have a pro handling your account to negotiate buy backs and other penalties.
roadrunner
<< <i>I've personally seen this happen in small auctions with small-time coin dealers - I'd imagine that it also happens with large auction houses. If you go to small/local collectibles auctions with a lot of regulars, you can clearly see the anger on the coin dealers faces when some new-comer dares to bid higher than them on an auction.
Then I guess they need to "school" these new-comers aforehand eh?
Around 1990 a group of dealers attending the auction of the archives of the American Banknote Company (paper money) got together
in a collusion ring in order to keep the auction prices low.
It took several years of govt. investigation but the end result was guilty pleas and heavy fines, at least one was for $120,000.
<< <i>legal and fair, yes....
Ummmmm no it is not legal and certaintly not fair. It is considered restraint of trade and is illegal.
Steve >>
So why is blocking an eBay bidder not considered "restraint of trade"?
If I refuse to sell you a coin from a BS&T posting is that considered "restraint of trade?"
I think some people's answers in this thread seem more about it being illegal/immoral/wrong when it is other people up to it.
All this in an era when oil prices are manipulated, or seem to be, and the country suffering from collusion on a crazy level, and we are worried about some coins?
Well, just Love coins, period.
TRUTH
- Bob -
MPL's - Lincolns of Color
Central Valley Roosevelts
So? This happens all the time, even for non insiders. I remember asking for and receiving reserve information back in 1997 when I was a nobody buyer.
1. Illegal? Yes, as already established, with examples, in this thread.
2. Ethical?
A. No. Societal ethics drive legislation. Hence, the society we operate within is dictated by norms, mores and morals – all of which dictate legislation against price fixing and collusion.
(I intentionally do not address contention – often factual – that most legislation is not driven my ethics but instead is driven by special interest groups.)
B. Yes. Although illegal, price fixing and collusion is indeed quite common at auctions, not just in the numismatic community. Have you ever gone to a regular auction format for homes sold for tax liens or foreclosures? How about auctions for storage rental unit property where rent was not paid and collateral is being auctioned off?
At both of those regular types of auctions, a community of prospective buyers builds around the process. Those prospective buyers, typically and eventually, build a consensus and resultant working model which regularly distributes property at the lowest cost to the prospective buyers as a group, and thus individually.
For example, the tax lien buyers may work out a schedule where ‘Joe’ gets the winning bid this month and ‘Sally’ gets the winning bid next month. Same with rental auctions.
In BOTH cases, when a new prospective buyer arises at auction, the existing network will lock out the newbie by raising their bids artificially, ensuring the newbie does not win the bid and therefore discouraging future participation. The group will then work out a mechanism to reimburse the high bidder amongst them.
Since this type of activity is common and replicated across bourse floors and item types – this demonstrates that our societal and individual actions, mores, and ETHICS supports the activity.
Therefore, the activity is ethical.
Text
<< <i>
So why is blocking an eBay bidder not considered "restraint of trade"?
If I refuse to sell you a coin from a BS&T posting is that considered "restraint of trade?" >>
You are the seller, and have that right, knowing that you are possibly losing money blocking someone (like the
guy on here that blocked me from bidding on his matte proof Lincolns)
But when a group of buyers makes the decisions who won't bid on your coins, it's stealing from you.
<< <i>Any colluding that would be going would be at the highest levels of the auction house.
>>
Quite the opposite. It all comes from the bidders, not the auction house. The auction house LOSES commission when this happens.
<< <i>The person calling was asking "what are the reserves and what kind of money do I have to bid to get the coins." Unthoughful of my presence, the owner stated "you have to pay XXX, YYY, ZZZ to win the lots." and hung up the phone. The owner of the auction house had just given out consigner reserves!!! TRUTH >>
That's often given out as a courtesy so people don't waste their time doing research and placing a bid that won't even count.
<< <i>Therefore, the activity is ethical. >>
Breaking a Federal law is not ethical. A person can rationalize all they want, but breaking laws involve deception which is unethical.
<< <i>If it is illegal for two collectors to verbally agree to back off each other's favored lots, then consider this scenario. Suppose collecor A agrees to back off and then doesn't, causing collector B to pay much more than intended. Can collector B sue collector A for breaking a contract? Somehow I doubt it.
You can't have it both ways. If you don't recognize the collusion as a contract, then how can you call it illegal? >>
Yes they can sue and, with sufficient evidence, win that suit. But that would be like robbers suing each other for unfairly dividing the loot from a heist, very stupid to have on public record.
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<< <i>Breaking a Federal law is not ethical. A person can rationalize all they want, but breaking laws involve deception which is unethical. >>
PUH-LEASE!!! What century were you born in? How about Federal laws supporting slavery? Needless to say, there are lot's of other examples.
U.S. Type Set
U.S. Type Set
Point 1 - It's illegal
Point 2 - It might also be unethical, if, under these hypothetical circumstances blah blah blah
No need to discuss anything beyond Point 1.
Jay
<< <i>in this theoretical example the theoretical seller wouldn't per chance have agreed in a friendly manner with other buyers about certain lots at other auctions while he/she was building up his/her own collection now would they? >>
Awe yes, I am sure in the OP example the "collectors" were best buddies and behaved in a nice and friendly manner. Now did they explain to the consigner how much they screwed him out of? Breaking laws always involve deception. There is no shortage of people who believe illegal behavior is ethical in their own world, the largest group of these is in prison.
Ethically, this is a no brainer. Not certain that it is criminal, though. Most of the laws cited earlier pertain to the opposite side of the transaction, e.g. price fixing. Then again, I believe conspiracy is a stand alone crime where the underlying acts need not, in and of themselves, constitute a crime. I agree that proofs may be tough, unless one or more of the co-conspirators is careless with sharing the plan.
I have had some hard core collectors and dealers threaten me (so to speak) that if I put my collection with an auction house and I don't sell my best stuff to them private treaty they will collude amongst themselves to keep the prices down.
Next time they are after me I am going to educate them too.
thanks
Krueger
Mike
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<< <i>On a tangent: Consider a specialist dealer is representing a consignor for a fee. Since it is a niche specialty, he/she also often represents others in the specialty who respect his/her knowledge. This dealer also then represents a bidder. The bidder instructs him to bid according to what the dealer thinks the coin lot is honestly worth. The result is the bid and final hammer are high and that also means fees to the dealer are maximized. Just theoretical. I know we discussed dealers who represent multiple clients chasing the same coin in the past but also wondered for some time about one who might play both sides of a fence. Where would the loyalty be? Whose best interest would the dealer represent, the consignor or the bidder? Should such a dealer refrain from representing anyone's interest in bidding coins in an auction for which he/she worked on the consignment? Might be worth discussing. Not sure how prevalent it is but would think it does occur. >>
John: There's no problem whatsoever provided the dealer representing the bidder is not involved in collusion to hold the prices down. If the dealer representing the bidder also represented the consignor (by assisting him with consignment arrangements, etc. for a fee) -- he would not only be an unethical creep to participate in collusion, but he would be an idiot as well because he would be cutting his own throat. I think that came out right
I hope that answers your question.
Mike
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Specializing in DMPL Dollars, MONSTER toners and other Premium Quality U.S. Coins
*** Visit Mike De Falco's NEW Coin Talk Blog! ***
Reserves are somewhat meaningless for buyers.
K
My 1866 Philly Mint Set
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Many valid points and arguments made here!
Thank you for bringing it up for discussion.