Rare Book Monthly

Articles - April - 2010 Issue

New York State Considers (Weakened) Auction Regulations


Assemblyman Richard Brodsky submitted New York's auction reform bill.

By Michael Stillman

A significant piece of legislation designed to regulate auctions is working its way through the New York State legislature. While what happens in one out of 50 states in one out of a couple of hundred countries in the world may not sound that important, New York is the auction capital of the United States if not the world. Changes in New York do matter.

The bill, sponsored by Westchester County (just north of New York City) Assemblyman Richard Brodsky, who has been sponsoring consumer-oriented legislation for two decades, is designed to make the auction process more transparent to bidders. While some parts of this bill may be a bit burdensome for auction houses, other parts should be beneficial to bidders. Though we don't know whether the auction houses agree with the provisions, one key area appears to have been sufficiently watered down to perhaps make it palatable to them.

Assemblyman Brodsky's bill, "An act to amend the general business law, in relation to auction requirements," was passed by the New York State Assembly on a vote of 142-1. It seems unlikely, considering the margin, that the New York State Senate would defeat it, the greater risk being it gets bottled up and dies in committee. This has happened before.

In a prior version, the most controversial section of this legislation was one designed to throw light on hidden reserves, and what some call "sham," "phantom," or "chandelier" bidding. This is a process where an auction house starts the bidding at a number below an unannounced reserve price (the reserve being the minimum price at which the auction house will sell the item). If a bidder makes an offer below the reserve, the auction house may then make a higher bid. It's referred to as a "sham" bid as the bidder (the house) has no intention of actually buying the object. The purpose is to drive the bids up to the reserve price or higher. If the bidder thinks he or she is bidding against another real buyer, or just gets caught up in the frenzy, he may place a higher bid than he would if he realized the competing bids were "shams."

The current bill provides several provisions to limit or throw light on this practice, but it does not prohibit it, and a strong transparency provision from the earlier version has been eliminated. Brodsky's legislation requires that auction houses disclose whether an item is subject to a reserve price, though the reserve price need not be disclosed. Once the reserve price has been met, an auctioneer may no longer bid on behalf of a consignor, nor may auctioneer or consignor bid on their own behalf without revealing their status. In other words, no undisclosed "sham" bids once the reserve has been reached. Meanwhile, the reserve price may not be any higher than the minimum estimated price (if there is one).

The piece that was removed from an earlier proposal was a requirement that so-called "sham" bids be identified by the auctioneer as being "for the consignor." This would have prevented undisclosed "sham" bids below the reserve as well as above it. Other bidders would know the price was being pushed up by the auction house, not another true bidder. Under the revised legislation, bids made by the auctioneer below the reserve would not be so identified. Buyers would know that this was a possibility by the announcement that items were subject to a reserve (provided they understood the implications), but would have no way of knowing, on any individual item, whether the bidding was real or "sham" since the "for the consignor" requirement was stripped from the bill.

When the original bill was filed several years ago, it included the following "justification" to require disclosure of all "sham" bidding: "Acceptance of a sham bid by an auctioneer on behalf of an auction house is essentially a deceptive practice. There is no justifiable reason to permit the taking of fake bids without disclosure of this practice to the public. The theatrical benefits created by this practice are far outweighed by the public's right to be informed of the acceptance of such bids during the auction process. This theatrical game playing is akin to pulling the wool over the consumer's eyes. Identification of the acceptance of such bids with the phrase 'for the consignor' would put an end to the chicanery being perpetrated by the auction houses." This wording is no longer mentioned in the current bill. By implication, the current bill continues to allow a certain amount of "chicanery."

Rare Book Monthly

  • <b>Forum Auctions: Fine Books, Manuscripts and Works on Paper. March 22, 2018</b>
    <b>Forum Auctions, Mar. 22:</b> Jenner (Rev. George Charles). <i>The Evidence at Large...Respecting Dr Jenner's Discovery of Vaccine Inoculation,</i> presentation copy from Edward Jenner to Rev. Rowland Hill, 1805. £4,000 to £6,000
    <b>Forum Auctions, Mar. 22:</b> Houdini (Harry).- Maggi (Girolamo). <i>De tintinnabulis liber postumus...de equuleo liber,</i> Harry Houdini's copy, Amsterdam, H. Wetstein, 1689. £600 to £800
    <b>Forum Auctions, Mar. 22:</b> Meyer (Henry Leonard). Coloured Illustrations of British Birds, and their Eggs , 7 vol. in 2 plus Illustrations of British Birds, 4 vol., 1842-50 and [1835-51]. £5,000 to £7,000
    <b>Forum Auctions: Fine Books, Manuscripts and Works on Paper. March 22, 2018</b>
    <b>Forum Auctions, Mar. 22:</b> Dickens (Charles). <i>An Entirely New Romantic Drama, in Three Acts, by Mr. Wilkie Collins, called The Frozen Deep,</i> 1857. £3,000 to £4,000
    <b>Forum Auctions, Mar. 22:</b> Lighthouses and Islands of Ireland, c. 125 drawings, 1867. £6,000 to £8,000
    <b>Forum Auctions, Mar. 22:</b> Shelley (Lady Jane). Diary, 1853 & 1860. £1,500 to £2,000
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    <b>Forum Auctions, Mar. 22:</b> Scottish Binding.- The Holy Bible, Containing the Old and New Testaments, bound in contemporary brown polished calf decorated with the figure of a Chinese spearman, by ?James Scott of Edinburgh, 1778. £2,000 to £3,000
    <b>Forum Auctions, Mar. 22:</b> Greene (Graham). <i>The Man Within,</i> first edition, signed by the author, 1929. £4,000 to £6,000
    <b>Forum Auctions, Mar. 22:</b> Mellan (Claude, 1598-1688). The Holy Face, or the Veil of St Veronica, [c. 1649 and later]. £800 to £1,200
    <b>Forum Auctions: Fine Books, Manuscripts and Works on Paper. March 22, 2018</b>
    <b>Forum Auctions, Mar. 22:</b> Desaguliers (John Theophilus). <i>A Dissertation concerning Electricity,</i> W. Innys, and T. Longman, 1742. £2,000 to £3,000
    <b>Forum Auctions, Mar. 22:</b> Le Jeune (Paul). <i>Relation de se qui s'est passé en la Nouvelle France en l'anné 1636 enuoyée au R.Pere Provincial de la Compagnie de Iesus en la Province de France,</i> 1637. £2,000 to £3,000
    <b>Forum Auctions, Mar. 22:</b> Stumpf (Johann Rudolph). <i>Gemeiner loblicher Eydgnoschafft Stetten, Landen und Völckern Chronicwirdiger thaaten beschreibung, </i> Zurich, Froschauer, 1586. £3,000 to £4,000
  • <b>Swann Auction Galleries Mar 22: Autographs</b>
    <b>Swann Auction Galleries Mar 22:</b> George Washington, Letter Signed to General James Clinton, preparing for the Sullivan-Clinton Campaign, 1778. $25,000 to $35,000.
    <b>Swann Auction Galleries Mar 22:</b> Thomas Jefferson, Letter Signed, to Major-General Nathanael Greene, promising to send reinforcements against Cornwallis, 1781. $15,000 to $25,000.
    <b>Swann Auction Galleries Mar 22:</b> Thomas Edison, Autograph Letter Signed, to Western Union President William Orton, 1878. $10,000 to $20,000.
    <b>Swann Auction Galleries Mar 22: Autographs</b>
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    <b>Swann Auction Galleries Mar 22: Autographs</b>
    <b>Swann Auction Galleries Mar 22:</b> Mohandas K. Gandhi, Autograph Letter Signed, describing the source of his patience, 1939. $4,000 to $6,000.
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    <b>Swann Auction Galleries Mar 22:</b> Charles The Bold, Duke of Burgundy, Letter Signed to Johann IV of Nassau, in French, 1470. $3,000 to $4,000.
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    <b>Swann Auction Galleries Mar 22:</b> Jean Cocteau, Autograph Letter Signed, in French, 1919. $3,000 to $4,000.
    <b>Swann Auction Galleries Mar 22:</b> Louis Armstrong, two Autograph Letters Signed to Erich Kauffmann, his lip salve purveyor, 1965-70. $1,500 to $2,500.
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  • <b>Bonhams: Fine Books and Manuscripts. March 9, 2018</b>
    <b>Bonhams, Mar. 9:</b> BEETHOVEN, LUDWIG VAN. Autograph Manuscript sketch-leaf part of the score of the Scottish Songs, "Sunset" Op. 108 no 2. [Vienna, February 1818]. Inscribed by Alexander Wheelock Thayer. $80,000 to $120,000
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    <b>Bonhams, Mar. 9:</b> HAMILTON, ALEXANDER. Autograph Letter Signed, to Baron von Steuben, with extensive notes of Von Steuben's aide Benjamin Walker, June 12, 1780. $10,000 to $15,000
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