What exactly is a "conflict of interest"? And is it necessarily "bad"?

[James_OldeTowne]

Much recent discussion focuses on "conflict of interest". I'm no lawyer, and maybe my understanding is poor, so let me try an analogy.

 

Suppose Moe, Joe and Flo are each the only and equal partners in ABCGS, a coin grading company. They share profits equally. Each also happens to be a grader for the company. Two graders are required to grade a coin.

 

Flo submits a coin to ABCGS, and Moe and Joe grade it.

 

My questions:

 

Does the potential for conflict of interest exist?

What are the ramifications, if any?

[Tradedollarnut]

If a coin dealer handles mainly non CAC stickered coins and rants against CAC - isn't that a conflict of interest?

[IGWT]

I posted my thoughts about the conflict of interest in the other thread.

[BillJones]

Much recent discussion focuses on "conflict of interest". I'm no lawyer, and maybe my understanding is poor, so let me try an analogy.

 

Suppose Moe, Joe and Flo are each the only and equal partners in ABCGS, a coin grading company. They share profits equally. Each also happens to be a grader for the company. Two graders are required to grade a coin.

 

Flo submits a coin to ABCGS, and Moe and Joe grade it.

 

My questions:

 

Does the potential for conflict of interest exist?

What are the ramifications, if any?

 

The remifications are obvious, and it's one of the reasons why none of the "home grown" grading services that are run by active dealers have never gottne much traction in the market.

 

There is also the problem of large coin dealers holding significant equity interests in companies like Collectors' Universe. It's just a fact the collectors should keep in mind when they purchase certifed coins from those firms.

[bsshog40]

I would say that this would qualify for conflict of interest. Conflict of interest can be defined as any situation in which an individual or corporation (either private or governmental) is in a position to exploit a professional or official capacity in some way for their personal or corporate benefit. Having two roles is not illegal, part owner and official grader, but the differing roles will certainly provide an incentive for improper acts in some circumstances.

[MarkFeld]

Much recent discussion focuses on "conflict of interest". I'm no lawyer, and maybe my understanding is poor, so let me try an analogy.

 

Suppose Moe, Joe and Flo are each the only and equal partners in ABCGS, a coin grading company. They share profits equally. Each also happens to be a grader for the company. Two graders are required to grade a coin.

 

Flo submits a coin to ABCGS, and Moe and Joe grade it.

 

My questions:

 

Does the potential for conflict of interest exist?

What are the ramifications, if any?

Of course the potential exists, as it does in many businesses. Another major consideration is HOW it is handled. And that isn't always known.

 

Now I have a question for you - isn't there a potential conflict of interest any time a company (whether it be a coin grading company or any other kind) is performing a service for its largest/best customers? Especially when the outcome of the service can have a meaningful financial impact on the customer?

[Tradedollarnut]

"Life is a conflict of interest" - Carson City

[DC Dawg]

"Life is a conflict of interest" - Carson City

Oh no... we know the world is going to hades in an hand basket when TDN quotes CC!

 

 

Scott

[rrantique]

"Life is a conflict of interest" - Carson City

Oh no... we know the world is going to hades in an hand basket when TDN quotes CC!

 

 

Scott

[MikeInFL]

My questions:

 

1. Does the potential for conflict of interest exist?

2. What are the ramifications, if any?

 

1. Yes.

 

2. The grading company's integrity is questioned at best, and (if it causes overgrading) the dilution of value of existing coins at worst.

[CHABSENTIA]

There is an appearance of a Conflict of Interest.One would have to prove that the coin/s grade was a result of the relationship between the three. Waht grade did Flo receive? What if it was proven later that Flo did not get along well with the other two and she received a bad grade? Again the appearance factor comes into the equation.

 

If I am in the Retail Business and have a chain of stores that I sell to a big Conglomerate there is usually a clause that the Seller will not go into that business for a certain period of time.I think it woul dbe best here that not only was there an agreement but common sense should dictate that Flo should have sent the coin someplace else.

 

My point earlier was that JA was the Co-Founder of PCGS and the Founder of NGC and now he is solidifying grades for just PCGS and NGC. I beleive that CAC is not stickering Moderen Coins such as the A.S.E. Does anybody know how long after 1986 which was the first issue of the A.S.E. that JA left the two?

 

At any rate, the Conflict of Interest I mentioned was a possible outcome should arise if it was proven later that a con was refused a CAC sticker that was originally slabbed when JA was present at that particular TPG. It might not be a conflict of interest but it brings into question the accuracy of the decision.

 

My take on a Lawsuit would be to accuse the sued Party of every thing under the Sun that could be a problem and increase the chances that one or several would stick...

 

I would think that in your example of ABCGS that it is not one of the top tier TPGs and that many people would not be sending their coins in the first place.

 

If ABCGS became a success adn sold their Business and then decided to go into the Business of Solidifying grades and called their new Company DAD and sid they were only going to sticker ABCGS then the same questions would exist.

[CHABSENTIA]

Another question I would have here relates to the earler post of the Retail example.

 

Like the Retail example does anybody know if JA had to sign an agreement that he would not go into the Grading/TPG business for a certain period of time since these clauses are common.?