Another "conflict of interest" question came to mind... at least I think it is

[James_OldeTowne]

Your opinions on this, please.

 

If an auction company pays a cataloger a commission that is based on the closing value of lots that he describes, does this represent a conflict of interest? In other words, let's say that the cataloger receives a commission of 5% of the value of the coin over its reserve. Does this represent an improper incentive to exaggerate a coin's positive attributes, thus leading to higher bids and a bigger commission?

 

Would it make a difference if the catalog mentioned the commission in a disclaimer?

[MikeInFL]

To me, it is no different that the conflict of interest present in any auction description offered by an auction house, but yes, there is a conflict of interest. Part of the reason I ignore/discount any verbal description offered by any seller/auctioneer...Mike

[IGWT]

There's no conflict of interest because the cataloguer is working solely for the auction house (and, by extension, the consignor). A conflict of interest does not exist unless a person owes a duty to two (or more) people whose interests are opposed, either actually or potentially.

[MikeInFL]

Doesn't the auction house owe the buyer an accurate description?

[Tradedollarnut]

I think you can find conflicts of interest anywhere if you look hard enough and have an active imagination. Kinda like many phobias. Most normal people are able to deal with such things and focus only on those that really matter.

[IGWT]

Doesn't the auction house owe the buyer an accurate description?

A qualified "yes." First, the terms and conditions of the auction (which are typically accepted by the bidder by simply placing a bid) will govern the scope of the auction house's obligation. I know that you've read the typical T&Cs, Mike; but, for those who haven't, they're a real eye opener. Second, in the absence of any terms and conditions, the auction house would be obligated to write truthfully about factual representations. But that obligation does not exist as a result of any special relationship between the auction house and the potential purchaser. That obligation, therefore, doesn't create a "conflict of interest" as that term is commonly understood.

[MarkFeld]

There's no conflict of interest because the cataloguer is working solely for the auction house (and, by extension, the consignor). A conflict of interest does not exist unless a person owes a duty to two (or more) people whose interests are opposed, either actually or potentially.

What about a situation where there is more than one example of a particular coin of the same date and grade, etc., but the auction house owns one of them?

[IGWT]

I think you can find conflicts of interest anywhere if you look hard enough and have an active imagination. Kinda like many phobias.

Of course there are conflicts of interest anywhere and everywhere. Two people negotiating a contract from different sides have a conflict of interest. There's nothing wrong with that.

 

But let's say you hire a lawyer to negoatiate the purchase of business. Then, after striking a deal, you find out that your lawyer was an undisclosed owner of the business that you just bought (and for which you paid more than anticpated). You complain, but the lawyer swears up one side and down the other that he had your best interest in mind. Do you believe him?

[Tradedollarnut]

Why would I hire a lawyer to negotiate a biz deal for me? Lawyers don't know squat about business...

[IGWT]

There's no conflict of interest because the cataloguer is working solely for the auction house (and, by extension, the consignor). A conflict of interest does not exist unless a person owes a duty to two (or more) people whose interests are opposed, either actually or potentially.

What about a situation where there is more than one example of a particular coin of the same date and grade, etc., but the auction house owns one of them?

That's a classic conflict of interest. And, IIRC, the terms and conditions of all the auction houses disclose the possibility of that conflict, although I think the warning is directed more to potential bidders than to consignors. I don't know whether or not it's also disclosed in the consignor's agreement.

[IGWT]

Why would I hire a lawyer to negotiate a biz deal for me? Lawyers don't know squat about business...

Damn. I was trying to come up with an example that you could relate to.

[MikeInFL]

Doesn't the auction house owe the buyer an accurate description?

A qualified "yes." First, the terms and conditions of the auction (which are typically accepted by the bidder by simply placing a bid) will govern the scope of the auction house's obligation. I know that you've read the typical T&Cs, Mike; but, for those who haven't, they're a real eye opener. Second, in the absence of any terms and conditions, the auction house would be obligated to write truthfully about factual representations. But that obligation does not exist as a result of any special relationship between the auction house and the potential purchaser. That obligation, therefore, doesn't create a "conflict of interest" as that term is commonly understood.

 

While I appreciate your agreeing with me (even with qualificiations), I don't necessarily agree with your rationale/qualificiations... although I admit you may have lost me with your second point.

 

To wit, just because an auction house relieves themselves of the obligation of truthfulness doesn't change the fact that they have a conflict of interest. All it does is change the remedies, and (to me) reinforce the argument that a conflict of interest exists...Mike

 

p.s. what do you mean by "special relationship"?

 

[MarkFeld]

There's no conflict of interest because the cataloguer is working solely for the auction house (and, by extension, the consignor). A conflict of interest does not exist unless a person owes a duty to two (or more) people whose interests are opposed, either actually or potentially.

I'll disagree with that. The cataloger might be working for the auction house, hence the consignor, but why should that mean he doesn't have at least an ethical duty to describe a coin fairly and accurately? Also, what if the auction house wants to buy a coin that has been consigned to it? To whom does the cataloger owe the duty then - the consignor or the auction house that he is working for?

 

Lastly, below is a definition of "conflict of interest" that I found with a quick search. It doesn't include a requirement that a duty is owed to more than one individual:

 

"the circumstance of a person who finds that one of his or her activities, interests, etc., can be advanced only at the expense of another of them".

[okbustchaser]

I don't think that the situation described here is a problem at all. I do see a possible conflict of interest if the cataloguer plans to bid on his own behalf. Does he truthfully describe a PQ lot which would then require a higher winning bid on his part or does he underdo the description in order to win at a lower level?

[IGWT]

While I appreciate your agreeing with me (even with qualificiations), I don't necessarily agree with your rationale/qualificiations... although I admit you may have lost me with your second point.

 

To wit, just because an auction house relieves themselves of the obligation of truthfulness doesn't change the fact that they have a conflict of interest. All it does is change the remedies, and (to me) reinforce the argument that a conflict of interest exists...Mike

 

p.s. what do you mean by "special relationship"?

I'm probably thinking of a conflict of interest more narrowly than you are. I see it as the problem that arises when a person places himself in the position of serving two masters whose interests are or might become opposed. Technically, the auction house is not working for the potential purchaser, and its obligation to be truthful doesn't come from any relationship between the two.

 

The cataloger might be working for the auction house, hence the consignor, but why should that mean he doesn't have at least an ethical duty to describe a coin fairly and accurately?

I didn't say that there wasn't an ethical duty to describe a coin fairly and accurately. I said that that there was no conflict of interest (for the reasons explained further in my response to Mike's post)

 

Also, what if the auction house wants to buy a coin that has been consigned to it? To whom does the cataloger owe the duty then - the consignor or the auction house that he is working for?

Technically, the cataloguer's duty is the same as the auction house's duty, so it falsely complicates the issue to look at them separately. The auction house (and the cataloguer) has a conflict of interest in the situation that you describe.

 

Lastly, below is a definition of "conflict of interest" that I found with a quick search. It doesn't include a requirement that a duty is owed to more than one individual:

 

"the circumstance of a person who finds that one of his or her activities, interests, etc., can be advanced only at the expense of another of them".

The Internet is better for some things than for others.

[MikeInFL]

While I appreciate your agreeing with me (even with qualificiations), I don't necessarily agree with your rationale/qualificiations... although I admit you may have lost me with your second point.

 

To wit, just because an auction house relieves themselves of the obligation of truthfulness doesn't change the fact that they have a conflict of interest. All it does is change the remedies, and (to me) reinforce the argument that a conflict of interest exists...Mike

 

p.s. what do you mean by "special relationship"?

I'm probably thinking of a conflict of interest more narrowly than you are. I see it as the problem that arises when a person places himself in the position of serving two masters whose interests are or might become opposed. Technically, the auction house is not working for the potential purchaser, and its obligation to be truthful doesn't come from any relationship between the two.

 

I think you're right (that we define the term differently). Thanks for the thought-provoking discussion (and thanks to James for the interesting topic, too!)...Mike

[bsshog40]

There can be alot of circumstances that would give the intent of "conflict of interest" or the ability for "conflict of interest", but most issues of "conflict of interest" are premeditated.

[IGWT]

I think you're right (that we define the term differently).

I knew what you meant even before you added the clarifying parenthetical. An agreement to disagree is not the same as yielding any ground.

[carson city]

No conflict, the coin is what it is. No amount of sophistry can change that.