Isn't it pretty obvious that TPGs should be non-profit organzations, and not...

[RUSS BEGA]

i can assure you that NGC and Heritage are not affiliated. And shill bidding is a BIG no no.

 

-Russ

On what basis can you make that assurance?

 

I have heard from people that there was or is an affiliation. I don't claim to know whether it's true, but doubt that you are in any position to make the assurance that you did.

He posted he owned a minority position in CGC. It was sugested (in the thread) he owned 12.5% stock in NGC.

 

Here's a link to his past;

http://www.forbes.com/forbes/2004/1227/156.html

 

The thread the link originated from:

http://boards.collectors-society.com/ubbthreads.php?ubb=showflat&Number=625739&fpart=1

 

Here's his post in response to the thread:

 

Just to clarify a few of the many misstatements and misleading speculations in this thread and the Forbes article (and, I hope, move on), here are a few things you should know. By the way, since someone brought it up, the philosophy of my novel The Truth Machine is deeply ingrained in my personal belief system. I try to be an open book with everyone I know and basically don't keep secrets, often to my detriment. But I'm way too old to change. Unfortunately, very often the unfiltered truth can easily be twisted to appear sinister.

 

1) My partner Steve Ivy and I own a minority position in CGC -- entirely non-voting stock. We have no control whatsoever over CGC grading, hiring, or company policy. It was purely a financial investment (and so far not an especially good one, though we like and admire the company and its managers very much). Neither we nor CGC have ever made any attempt to hide our investment from anyone. We get the same treatment from CGC as every other dealer, and we submit our books through the same anonymous process as everyone else.

 

2) Ask any coin dealer who regularly bids at auctions, and most likely they will tell you that Heritage is the ONLY numismatic auction company they feel comfortable leaving their max bids with. As an aside, Heritage has 240 employees. Does anyone reading this really think we could possibly run up bidders without a single one of those employees knowing about it, and thereby having something to hold over our heads forever? Assuming not, why on earth would we ever consider doing that? Please give us credit for not being insufficiently_thoughtful_persons. Keep in mind that it's very common for people to complain when they feel the final price of an item they've won is close to or at their maximum bid. It happens, especially in a market as easy to research as slabbed comics and coins. That's what auctions are all about. But how many people talk about the items they've won at far below their maximum? That's also a common occurence in this business, but one that doesn't result in nearly as many message board threads (just lots of repeat business from those bidders).

 

3) As far as I know, we are also the only auction company that maintains a free, fully SEARCHABLE Past Auction Archive, with photography. Obviously, with hundreds of thousands of past comic book and coin sales, and message boards on the CGC and NGC sites, it is no great challenge to find comic books and coins from past auctions that have subsequently been upgraded and reconsigned, even if such items comprise a very small percentage of the total. If we were trying to do anything sneaky, why would we provide all the evidence in such an easy-to-research form? Coin dealers and expert collectors routinely conserve and resubmit high-end slabbed coins (a small but very visible and sought-after percentage of the graded universe), and the free market system being what it is, could there ever have been any doubt that comic dealers and collectors would do the same? Because experts compete hard for high-end slabs, auctions are, in fact, an ideal vehicle for collectors who don't know how to identify high-end coins (or comics) to nonetheless realize most of the potential of their upgrades. Again, no secret. In fact, it's one of the major advantages to consigning to Heritage.

 

4) Yes, we do allow employees to bid in our sales, except in very rare instances where the consignor (foolishly) requests otherwise. Our job is to create an honest playing field, not to hold down the prices for the benefit of bidders who prefer less competition. No employee at Heritage has any advantage over any other bidder, and employees are actually at a disadvantage in our comics sales because we don't allow them to bid live. Granted, like all local bidders they don't have to pay shipping if they pick up their lots in person, but they do pay sales tax unless they have a resale number, and they pay the exact same Buyer's Premium as everyone else. As far as I know, there are no major auctioneers who don't allow employees to bid.

 

5) I can't even BEGIN to dissect all the innuendo and falsehoods in the Forbes article, but an instructive example was discussed in this forum. Apparently it was assumed that CRCG (a company that the FTC accused of overcharging customers) was owned by Heritage because Forbes opted to refer to CRCG as "Heritage-backed". In fact, we had no control over CRCG at all, and the term "Heritage-backed" was based on the mere fact that we had given CRCG a credit line! EVERY other negative in the article about me, Heritage, and the coin business was similarly slanted. Why they chose to do that, I have no idea. The reporter seemed like a nice, honest and friendly fellow. Shows what a great judge of character I am.

 

I am done talking about this, so please don't expect me to respond to any more postings on this string. If some choose to take advantage of that, so be it. My reputation is very important to me, just as I'm sure all of yours are to you. If you had trusted some reporter who claimed he wanted to write an article about your comic book collection and your company's pioneering innovations, then instead published a bunch of lurid innuendo like that Forbes article, you probably wouldn't want to think about it much anymore either. So I will now go back to spending the weekend with my family. Thanks for letting me vent. I wish you all a wonderful holiday season and a happy and healthy 2005.

 

Jim Halperin

 

---------------------

James L. Halperin

Co-Chairman

Heritage Galleries & Auctioneers

3500 Maple Ave. 17th Floor

Dallas, Texas 75219

Phone 214-528-3500

Direct fax 214-520-7108

mailto:Jim@HeritageGalleries.com

===

Take our survey http://HeritageGalleries.com

 

 

I may have taken the question the wrong way, i do apologize for that, they may own stock but i believed the question and or aqusation to be that NGC gives better grades because of it and that is just not true, so i do apologize for my response, i should have phrased it better

[Tradedollarnut]

Technically, he's correct because even if Jim still owns stock in NGC it's not the same as Heritage owning stock in NGC.

[MarkFeld]

I believe that at one time, Heritage also owned part of PCGS. If so, I don't know whether they still do or not.

[Tradedollarnut]

Insinuating that the top TPG's are market makers because they market grade coins is hilarious, A new low for our resident anti PCGS/CAC crusader.

[James_OldeTowne]

Insinuating that the top TPG's are market makers because they market grade coins is hilarious, A new low for our resident anti PCGS/CAC crusader.

OK, I agree with you and Mark that "market maker" is the wrong term. "Market manipulator" fits much better for the TPGs, but "market maker" still applies to CAC by their own assertions. I don't know what, if any, market influence SPG has or will have.

[Hard Times]

From what can be gleaned from Jim Halperin's note repeated here above, Heritage employees can bid on their auctions and the same rules apply to non Heritage employees. While on the face of it, that is likely reasonable and to the advantage of a consignor as noted. But does it still represents a conflict of interest? The employees can't help but have inside information on all items passing through the auction house. As an analogy, and maybe not completely appropriate, when a company runs a contest, or when one buys lottery tickets at a store, it is against the law for employees to partake in the contest or purchase lottery tickets at their place of work. Why? Conflict of interest, opportunity to manipulate. Who polices auction house employees and their inside info and bidding? How can we be sure there is no shilling taking place? Bottom line is, the higher the bid, the more the auction house makes, good for the consignors, not necessarily good for the bidders. Don't get me wrong here, I am a huge fan of Heritage, but............

 

[TonerGuy]

And this is why I shutter when people talk about coins being "investments."

 

For me its just a hobby, probably a better one than golf or fishing. I cant imagine coin collecting being an investment for 90% of those on this board. Once you learn about how the industry really does business you have to realize that the little guy will always be cut out of that.

 

I learned that the first time I saw one of my coins that I sold jump 2 points in grading even though I had cracked it and resubmitted it twice just for it to come back 63 and 64. I think the coin increased more $5,000 in value.

[cpm9ball]

I have heard rumors, and I've never researched it to know if it is true, that Heritage and Teletrade are both partially owned or in business with NGC. I also know that Teletrade and Heritage bid on the coins that people send for auction ( which in itself is straight up schill bidding)..These big auction companies also solicit raw coins and offer to send them for slabbing before auction....

 

Oh what a tangled web they weave...so yes, it actually IS possible that TPG's may also be grading coins that they draw profits from when sold........

I am confident that NGC and Teletrade have no such affiliation. And if/when Teletrade and/or Heritage bid on coins that others have consigned to auction, that is NOT shill bidding.

 

Mark, what would it be called then? They have a double interest - they are auctioning the coin for buyer and sellers fees, and they are bidding on those coins? They have every incentive to get the bid up because the higher it goes, the more they make. Isn't that a shill? I don't know if they are doing this just repeating allegations from jackson64, but if this is so, it is very disturbing, or is it justified somehow? Seems like a very clear conflict of interest if the house bids on its own auctions.

If an auction house bids on consignors' coins and wins them at prices that are too high, the extra commission they made due to the higher price realized, will be more than offset by their bad purchase.

 

A number of auction companies include in their terms of sale, language that they might place bids on consignors' coins, including those that they have consigned. I don't call it shilling, but you and others are free to do so. Either way, they disclose it and are not secretive about it.

 

Mark,

 

What I don't understand is why a consignor would agree to allow this. Let's suppose that I have a coin that I want sell, and I offer to sell it to ABC Auction Co. for $1000. They decline to buy it outright but agree to put it in their auction. Then, they bid on it and win it for $1000, but ABC charges a seller's premium of 15%, so instead of me getting $1000, I only get $850.

 

Chris

Chris, auction companies don't typically buy coins - they sell consigned ones. Yes, a seller might do better or worse by consigning to an auction than by selling outright.

 

As a consignor to an auction house, I much prefer that the auction house be allowed to place bids - it can only help consignors, not hurt them.

 

I guess I'm just too dense. If an auction company doesn't typically buy coins, then why would they bid on them? And, if they happen to be the high bidder, what then? Do they pay less for the coin because they can deduct their percentage?

I guess bidding on a coin, whether or not they have any intention of trying to win it, is different from buying a coin.

 

Chris

[MarkFeld]

I have heard rumors, and I've never researched it to know if it is true, that Heritage and Teletrade are both partially owned or in business with NGC. I also know that Teletrade and Heritage bid on the coins that people send for auction ( which in itself is straight up schill bidding)..These big auction companies also solicit raw coins and offer to send them for slabbing before auction....

 

Oh what a tangled web they weave...so yes, it actually IS possible that TPG's may also be grading coins that they draw profits from when sold........

I am confident that NGC and Teletrade have no such affiliation. And if/when Teletrade and/or Heritage bid on coins that others have consigned to auction, that is NOT shill bidding.

 

Mark, what would it be called then? They have a double interest - they are auctioning the coin for buyer and sellers fees, and they are bidding on those coins? They have every incentive to get the bid up because the higher it goes, the more they make. Isn't that a shill? I don't know if they are doing this just repeating allegations from jackson64, but if this is so, it is very disturbing, or is it justified somehow? Seems like a very clear conflict of interest if the house bids on its own auctions.

If an auction house bids on consignors' coins and wins them at prices that are too high, the extra commission they made due to the higher price realized, will be more than offset by their bad purchase.

 

A number of auction companies include in their terms of sale, language that they might place bids on consignors' coins, including those that they have consigned. I don't call it shilling, but you and others are free to do so. Either way, they disclose it and are not secretive about it.

 

Mark,

 

What I don't understand is why a consignor would agree to allow this. Let's suppose that I have a coin that I want sell, and I offer to sell it to ABC Auction Co. for $1000. They decline to buy it outright but agree to put it in their auction. Then, they bid on it and win it for $1000, but ABC charges a seller's premium of 15%, so instead of me getting $1000, I only get $850.

 

Chris

Chris, auction companies don't typically buy coins - they sell consigned ones. Yes, a seller might do better or worse by consigning to an auction than by selling outright.

 

As a consignor to an auction house, I much prefer that the auction house be allowed to place bids - it can only help consignors, not hurt them.

 

I guess I'm just too dense. If an auction company doesn't typically buy coins, then why would they bid on them? And, if they happen to be the high bidder, what then? Do they pay less for the coin because they can deduct their percentage?

I guess bidding on a coin, whether or not they have any intention of trying to win it, is different from buying a coin.

 

Chris

Heritage auction company doesn't bid on and buy coins, buyers for the rare coin company division of Heritage do. I don't know if they pay less or not for their wins, but if they do, it means the auction division nets less, to offset it.

[WoodenJefferson]

#%@ *!$ start these discussion threads during a Championship playoff game!!!

[jackson64]

I have heard rumors, and I've never researched it to know if it is true, that Heritage and Teletrade are both partially owned or in business with NGC. I also know that Teletrade and Heritage bid on the coins that people send for auction ( which in itself is straight up schill bidding)..These big auction companies also solicit raw coins and offer to send them for slabbing before auction....

 

Oh what a tangled web they weave...so yes, it actually IS possible that TPG's may also be grading coins that they draw profits from when sold........

I am confident that NGC and Teletrade have no such affiliation. And if/when Teletrade and/or Heritage bid on coins that others have consigned to auction, that is NOT shill bidding.

 

Mark, what would it be called then? They have a double interest - they are auctioning the coin for buyer and sellers fees, and they are bidding on those coins? They have every incentive to get the bid up because the higher it goes, the more they make. Isn't that a shill? I don't know if they are doing this just repeating allegations from jackson64, but if this is so, it is very disturbing, or is it justified somehow? Seems like a very clear conflict of interest if the house bids on its own auctions.

If an auction house bids on consignors' coins and wins them at prices that are too high, the extra commission they made due to the higher price realized, will be more than offset by their bad purchase.

 

A number of auction companies include in their terms of sale, language that they might place bids on consignors' coins, including those that they have consigned. I don't call it shilling, but you and others are free to do so. Either way, they disclose it and are not secretive about it.

 

Mark,

 

What I don't understand is why a consignor would agree to allow this. Let's suppose that I have a coin that I want sell, and I offer to sell it to ABC Auction Co. for $1000. They decline to buy it outright but agree to put it in their auction. Then, they bid on it and win it for $1000, but ABC charges a seller's premium of 15%, so instead of me getting $1000, I only get $850.

 

Chris

Chris, auction companies don't typically buy coins - they sell consigned ones. Yes, a seller might do better or worse by consigning to an auction than by selling outright.

 

As a consignor to an auction house, I much prefer that the auction house be allowed to place bids - it can only help consignors, not hurt them.

 

I guess I'm just too dense. If an auction company doesn't typically buy coins, then why would they bid on them? And, if they happen to be the high bidder, what then? Do they pay less for the coin because they can deduct their percentage?

I guess bidding on a coin, whether or not they have any intention of trying to win it, is different from buying a coin.

 

Chris

Heritage auction company doesn't bid on and buy coins, buyers for the rare coin company division of Heritage do. I don't know if they pay less or not for their wins, but if they do, it means the auction division nets less, to offset it.

 

From their own webpage.. 21. The Auctioneer, its affiliates, or their employees consign items to be sold in the Auction, and may

bid on those lots or any other lots. Auctioneer or affiliates expressly reserve the right to modify

any such bids at any time prior to the hammer based upon data made known to the Auctioneer or

its affiliates. The Auctioneer may extend advances, guarantees, or loans to certain consignors.

22. The Auctioneer has the right to sell certain unsold items after the close of the Auction. Such lots

shall be considered sold during the Auction and all these Terms and Conditions shall apply to

such sales including but not limited to the Buyer’s Premium, return rights, and disclaimers.

So yes, Heritage does buy and reserves the right to bid on coins-even ones that they have consigned

 

And from the Teletrade page:

 

1. AUCTION BASICS. This is a public auction sale ("Auction Sale") conducted by Teletrade, Inc. (hereinafter referred to as "Auctioneer" and at times as "Teletrade"). Bidding in this Auction Sale constitutes acceptance by Bidder of all the Terms and Conditions of Sale stated herein. Bidders may include consignors and their agents who may bid and purchase lot(s) in the Auction Sale consigned by the consignor or by other consignors pursuant to their consignment agreements with Teletrade ("Consignor" or "Consignors"). Consignors that bid on their own lots in the Auction Sale may pay a different fee than the buyer's fee charged to all other buyers, and may receive a rebate commission in whole or part if successful.

 

Teletrade reserves the right to include in any auction sale its own material as well as material from affiliated or related companies, principals, officers or employees. Teletrade may have direct or indirect interests in any of the lots in the auction and may collect commissions.

 

So Teletrade establishes that they do indeed consign their own coins AND that any consignor has the right to bid on their own coins

 

I can't tell you how frustrating it gets with Teletrade to be the high bidder on an item when it closes ( you think you got a decent price on a coin) and then see it listed as "unsold" and re-listed a week later...

[Mark T]

Isn't it pretty obvious that TPGs should be non-profit organzations, and not market makers? How can a company be unbiased in its coin grading opinions if its primary goal is to profit from the sale of the coins they certify?

 

I do not believe it is possible to render a valid, unbiased grade opinion on a coin if one has a financial interest in it's sale. That's just the business model that "self-slabbers" use. It's a blatant conflict of interest.

 

James your post is ridiculous, and I am being very generous with my comment.

[coinman_23885]

When a coin comes in, it is determined if it is nice for the grade or not. That's it. Collector gets their coin back. Market for coin is determined later. Obviously, there is no conflict of interest.

 

I very much disagree with you. The conflict of interest comes with the fact that third party grading services, at least those that are reputable, offer a "buy back" program to purchase coins that were not properly graded or that were otherwise unacceptable in the original holder. The conflict of interest can be seen in the following scenario: if you are a grader and a coin is worth $12,000 in MS64 or $35,000 in MS65, which grade do you think the company will pick? More than likely they would select the MS64 unless the coin was exceptionally high end for a MS65 because of the increased liability for the same grading fee (both coins would fall under the Express tier at both PCGS and NGC). This would also translate to a higher insurance premium when aggregated with the millions of coins that have been graded. The conflict of interest can also come into play when deciding whether a coin requires a buy back. For instance, if a coin is truly borderline, the company is more likely to err in their favor. It's just human nature. The graders do have a pecuniary interest in the coins they grade: if they expose the company to too much liability, it would affect corporate assets and their outlook for raises, benefits, salary, etc.

 

James, I agree with your premise, but unfortunately it is a business. Some service, even if conflicted, is better in this situation than pre-PCGS/NGC days. I know the services are not perfect, but they do increase the liquidty of raw coins, and I believe that they are the reason that the coin market is as strong as it has been barring the recent economic slump.

[mommam17]

I thought James was talking about CAC.

[MarkFeld]

When a coin comes in, it is determined if it is nice for the grade or not. That's it. Collector gets their coin back. Market for coin is determined later. Obviously, there is no conflict of interest.

 

I very much disagree with you. The conflict of interest comes with the fact that third party grading services, at least those that are reputable, offer a "buy back" program to purchase coins that were not properly graded or that were otherwise unacceptable in the original holder. The conflict of interest can be seen in the following scenario: if you are a grader and a coin is worth $12,000 in MS64 or $35,000 in MS65, which grade do you think the company will pick? More than likely they would select the MS64 unless the coin was exceptionally high end for a MS65 because of the increased liability for the same grading fee (both coins would fall under the Express tier at both PCGS and NGC). This would also translate to a higher insurance premium when aggregated with the millions of coins that have been graded. The conflict of interest can also come into play when deciding whether a coin requires a buy back. For instance, if a coin is truly borderline, the company is more likely to err in their favor. It's just human nature. The graders do have a pecuniary interest in the coins they grade: if they expose the company to too much liability, it would affect corporate assets and their outlook for raises, benefits, salary, etc.

 

James, I agree with your premise, but unfortunately it is a business. Some service, even if conflicted, is better in this situation than pre-PCGS/NGC days. I know the services are not perfect, but they do increase the liquidty of raw coins, and I believe that they are the reason that the coin market is as strong as it has been barring the recent economic slump.

 

Your predicted grading results, based on your conflict of interest premise, would result in far more under-graded coins than over-graded ones, especially in cases where there is a large value spread between two grades.

 

But, based on the coins I see in NGC and PCGS holders, that phenomenon has not occurred. In fact, look at the apparently liberal grading of a number of rarities and even super Rarities, such as 1804 Dollars.

 

Also, keep in mind that the grading companies, themselves, get to decide whether a coin is over-graded or not, and thus whether they need to honor their guarantee.

[coinman_23885]

 

But, based on the coins I see in NGC and PCGS holders, that phenomenon has not occurred. In fact, look at the apparently liberal grading of a number of rarities and even super Rarities, such as 1804 Dollars.

 

This is quite an interesting point, and I do believe that many super rarities are indeed inflated. I sometimes wonder if grading companies are more willing to inflate super-rarities just to have the privilege of having the coin in their company's holder (i.e. the added prestige, advertising from publicity, etc.). I know that when you are looking at an 1804 dollar, the difference in two or three grading points is trivial, but it is human nature to think that "higher is better" in terms of grading irrespective of whether the numbers are warranted.

 

While the coins that you referenced truly do not conform perfectly to the model that I promulgated, do you think that your observation is true for mid range coins (i.e. in the $10,000 - $35,000) where there is less of an inclination to inflate?

 

EDITED TO ADD: I like PCGS, NGC, and CAC very much; I'm not throwing off on any of the services.

[MarkFeld]

 

But, based on the coins I see in NGC and PCGS holders, that phenomenon has not occurred. In fact, look at the apparently liberal grading of a number of rarities and even super Rarities, such as 1804 Dollars.

 

This is quite an interesting point, and I do believe that many super rarities are indeed inflated. I sometimes wonder if grading companies are more willing to inflate super-rarities just to have the privilege of having the coin in their company's holder (i.e. the added prestige, advertising from publicity, etc.). I know that when you are looking at an 1804 dollar, the difference in two or three grading points is trivial, but it is human nature to think that "higher is better" in terms of grading irrespective of whether the numbers are warranted.

 

While the coins that you referenced truly do not conform perfectly to the model that I promulgated, do you think that your observation is true for mid range coins (i.e. in the $10,000 - $35,000) where there is less of an inclination to inflate?

 

EDITED TO ADD: I like PCGS, NGC, and CAC very much; I'm not throwing off on any of the services.

I just mentioned the ultra rarities as an example. And I do think that they tend to be graded more liberally, due to the competition to get them in one company's older vs. the other. But my comments also applied to all sorts of coins in various price ranges.

 

Edited to add:

 

So you know, I have taken into account that under-graded coins don't tend to be made available for sale as often as over-graded ones, since they are more likely to be held off the market and re-submitted. Even considering that, I see more coins that look liberally graded, than I so those which look under-graded.

[grade it-migration]

 

Teletrade reserves the right to include in any auction sale its own material as well as material from affiliated or related companies, principals, officers or employees. Teletrade may have direct or indirect interests in any of the lots in the auction and may collect commissions.

 

So Teletrade establishes that they do indeed consign their own coins AND that any consignor has the right to bid on their own coins

 

I can't tell you how frustrating it gets with Teletrade to be the high bidder on an item when it closes ( you think you got a decent price on a coin) and then see it listed as "unsold" and re-listed a week later...

 

I own 11 coins submitted by teletrade to a TPG under free coin grading. I have the paper work to document them to this fact. They are to valuable for me to send to get opinions. but will photo them on a separate post if any one is interested along with documentation ie coins, serial numbers and original submission forms.

 

 

[Razor2k]

 

Teletrade reserves the right to include in any auction sale its own material as well as material from affiliated or related companies, principals, officers or employees. Teletrade may have direct or indirect interests in any of the lots in the auction and may collect commissions.

 

So Teletrade establishes that they do indeed consign their own coins AND that any consignor has the right to bid on their own coins

 

I can't tell you how frustrating it gets with Teletrade to be the high bidder on an item when it closes ( you think you got a decent price on a coin) and then see it listed as "unsold" and re-listed a week later...

 

I own 11 coins submitted by teletrade to a TPG under free coin grading. I have the paper work to document them to this fact. They are to valuable for me to send to get opinions. but will photo them on a separate post if any one is interested along with documentation ie coins, serial numbers and original submission forms.

 

 

Whoa....Now wait just a sec..

 

From what you wrote, I gather that this is outright FRAUD! To be the high bidder when the auction closes...To have them not honor your bid?

 

Something doesn't smell right with this scenario. Maybe I am naive...but can people actually get away with this?

[grade it-migration]

 

Whoa....Now wait just a sec..

 

From what you wrote, I gather that this is outright FRAUD! To be the high bidder when the auction closes...To have them not honor your bid?

 

Something doesn't smell right with this scenario. Maybe I am naive...but can people actually get away with this?

 

Let me make this clear

 

I sent in raw coins for free grading to teletrade on a rewards program.

 

After they where graded at the tpg I had some sent back to me as part of this free grading in the tpg holder.

 

I have the official paper work from teletrade to the tpg and the coins here. Just to show if any one in interested to see the grades and coins in a tpg holder along with the documentation....

[comicdonna]

Major quote fail!

[Oldtrader3]

I am chronically amused by folks who pay millions in fines to the Federal Government (SEC, FTC) or through Courts to keep their name "clean" through paying a large fine with no-guilt-admitted. Just an observation from my days as a penny stock, desk-trader on the Canadian Stock Exchange with some third party observation of these deals made concerning large regulator fines with no-guilt-admitted!

 

Otherwise, I am staying out of this one.

[DC Dawg]

Isn't it pretty obvious that TPGs should be non-profit organzations, and not market makers? How can a company be unbiased in its coin grading opinions if its primary goal is to profit from the sale of the coins they certify?

 

I do not believe it is possible to render a valid, unbiased grade opinion on a coin if one has a financial interest in it's sale. That's just the business model that "self-slabbers" use. It's a blatant conflict of interest.

 

After reading the thread, let me interject:

 

I am a die hard capitalist. I prefer free markets with rules that allows for competition to compete on their merits. I also want the rules to allow new firms with new ideas to enter the market without existing companies to engage in predatory practices to stifle competition. Once the market is established, let the consumer determine which firm is better for them.

 

In the world of numismatic third party grading, the competition has come down to two major competitors. Sure there are others, but competition and service quality has dictated the market leaders: NGC and PCGS.

 

As part of the competitive world, NGC and PCGS are looking for every edge. The competition should be the driver to make their service as honest as possible. The state of the competition between the two drove PCGS to add new technologies to their service (see the "coin sniffer").

 

Are either of these companies perfect? No. But nothing that relies on human judgement is perfect. It is up to the market to decide whose imperfections are most tolerable.

 

Enter the Certified Acceptance Corporation. The CAC was formed by "concerned dealers" whose purpose is to try to keep NGC and PCGS "honest" by verifying the grade on the slab with the coin in that slab. Essentially, the CAC is grading the graders. Does this make the graders better? I think so!

 

In my real life, I work in the information security field. With my experience and background, I have skills that are specialized and in demand--including the ability to explain what I do in English. These skills has lead to me being hired by local universities to teach courses as an adjunct professor. During each semester, I am not only evaluated by students but I am evaluated by peers and the department heads--or grade the teacher. Showing me what I am doing "wrong" and teaching me what I can do to improve. If the critique works for teachers, it should work in other markets.

 

Does it matter that Collectors Universe, the parent company of PCGS, is running a coin trading site? I don't think so because if you look at CU's financial filings to the Securities Exchange Commission, PCGS is the unit that makes the most money for CU. It is in CU's best financial interest to ensure that PCGS does it "right" without regard for the exchange market. Without the market acceptance, PCGS fails and CU fails.

 

NGC, which is part of Certified Collectibles Group, is a private company leaving us speculating as to their financials and business functions. But their market seems to be grading and encapsulation of collectibles: coins, paper money, comic books, and magazines. Market conditions suggest that NGC and the rest of the CCG subsidiaries would provide the best service possible to ensure that collectors keep submitting their collectible to be certified and encapsulated.

 

Regardless of markets that these companies are involved, I believe that the competition and the CAC are forcing NGC and PCGS to be better at their jobs. In fact, I think they may be more reliable now than they have been in the last few years. It's the competition... the life blood of a free market system that benefits the consumer.

 

That being said, the vast majority of my collection is made up of raw coins and will remain that way. Only my registry sets and my expensive coins are certified--and that's more for the protection of my heirs.

 

Scott

[cpm9ball]

I have heard rumors, and I've never researched it to know if it is true, that Heritage and Teletrade are both partially owned or in business with NGC. I also know that Teletrade and Heritage bid on the coins that people send for auction ( which in itself is straight up schill bidding)..These big auction companies also solicit raw coins and offer to send them for slabbing before auction....

 

Oh what a tangled web they weave...so yes, it actually IS possible that TPG's may also be grading coins that they draw profits from when sold........

I am confident that NGC and Teletrade have no such affiliation. And if/when Teletrade and/or Heritage bid on coins that others have consigned to auction, that is NOT shill bidding.

 

Mark, what would it be called then? They have a double interest - they are auctioning the coin for buyer and sellers fees, and they are bidding on those coins? They have every incentive to get the bid up because the higher it goes, the more they make. Isn't that a shill? I don't know if they are doing this just repeating allegations from jackson64, but if this is so, it is very disturbing, or is it justified somehow? Seems like a very clear conflict of interest if the house bids on its own auctions.

If an auction house bids on consignors' coins and wins them at prices that are too high, the extra commission they made due to the higher price realized, will be more than offset by their bad purchase.

 

A number of auction companies include in their terms of sale, language that they might place bids on consignors' coins, including those that they have consigned. I don't call it shilling, but you and others are free to do so. Either way, they disclose it and are not secretive about it.

 

Mark,

 

What I don't understand is why a consignor would agree to allow this. Let's suppose that I have a coin that I want sell, and I offer to sell it to ABC Auction Co. for $1000. They decline to buy it outright but agree to put it in their auction. Then, they bid on it and win it for $1000, but ABC charges a seller's premium of 15%, so instead of me getting $1000, I only get $850.

 

Chris

Chris, auction companies don't typically buy coins - they sell consigned ones. Yes, a seller might do better or worse by consigning to an auction than by selling outright.

 

As a consignor to an auction house, I much prefer that the auction house be allowed to place bids - it can only help consignors, not hurt them.

 

I guess I'm just too dense. If an auction company doesn't typically buy coins, then why would they bid on them? And, if they happen to be the high bidder, what then? Do they pay less for the coin because they can deduct their percentage?

I guess bidding on a coin, whether or not they have any intention of trying to win it, is different from buying a coin.

 

Chris

Heritage auction company doesn't bid on and buy coins, buyers for the rare coin company division of Heritage do. I don't know if they pay less or not for their wins, but if they do, it means the auction division nets less, to offset it.

 

Okay! I'm learning slowly but surely, so please bear with me.

 

Heritage Auctions and Heritage Rare Coins are two divisions within the corporate structure. Let's assume that HA does not charge HRC a buyer's or seller's fee on any auction transaction, and it is simply recorded as an appropriate debit/credit notation on the financial statements.

 

HRC declines to purchase the coin, and it is consigned to HA where HRC bids and wins it for $1K. HA charges the consignor 15% (I don't know what the actual percentage should be.) In effect, they would be getting a $1K coin for the $850 which is paid to the consignor.

 

So, let's take it one step further. Suppose that HRC places the coin in the next HA auction, and once again, it sells to another buyer for $1K. Again, HA charges the buyer $150. HA has now made $300 for the corporate structure on a $1K coin, for which, HRC only paid $850. Instead of receiving a combined 30% in buyer's and seller's fees, the corporate structure has received 35.3%.

 

Does this make sense?

 

Thanks for putting up with me.

 

Chris

 

 

[Coindude]

Okay! I'm learning slowly but surely, so please bear with me.

 

Heritage Auctions and Heritage Rare Coins are two divisions within the corporate structure. Let's assume that HA does not charge HRC a buyer's or seller's fee on any auction transaction, and it is simply recorded as an appropriate debit/credit notation on the financial statements.

 

HRC declines to purchase the coin, and it is consigned to HA where HRC bids and wins it for $1K. HA charges the consignor 15% (I don't know what the actual percentage should be.) In effect, they would be getting a $1K coin for the $850 which is paid to the consignor.

 

So, let's take it one step further. Suppose that HRC places the coin in the next HA auction, and once again, it sells to another buyer for $1K. Again, HA charges the buyer $150. HA has now made $300 for the corporate structure on a $1K coin, for which, HRC only paid $850. Instead of receiving a combined 30% in buyer's and seller's fees, the corporate structure has received 35.3%.

 

Does this make sense?

 

Thanks for putting up with me.

 

Chris

Chris, you are making perfect sense, and therein lies the problem, or at lest the problem that I see, with what they do.

 

Although, I'm sure on paper, it all works out and is legal. I'm sure on paper, they show charges and whatnot, but it's all within the same company, so does the money really change hands? My company, and I'm sure all others do the same. You know, where the warehouse charges for you to come pick up a part, then if you don't need the part, when you return it, they charge a restock fee. Is it real money? No, but in the end, they get to write it off in some fashion so it's a tax write off of sorts. Sure, I don't understand how it all works out in the end, but there's some sharp pencil guy on the other end of a table somewhere who giggles a little bit every time that happens because he knows his process is working.

 

And, again, in the end, it's all legal because if you want to sell coins with them, you have to sign their consignment form, and in it, it says that you agree with their terms of service. So, you gave them permission to put the screw to you on both ends.

 

So, it's all "LEGAL" right!! After all.... you gave them permission to do it.

[MarkFeld]

I have heard rumors, and I've never researched it to know if it is true, that Heritage and Teletrade are both partially owned or in business with NGC. I also know that Teletrade and Heritage bid on the coins that people send for auction ( which in itself is straight up schill bidding)..These big auction companies also solicit raw coins and offer to send them for slabbing before auction....

 

Oh what a tangled web they weave...so yes, it actually IS possible that TPG's may also be grading coins that they draw profits from when sold........

I am confident that NGC and Teletrade have no such affiliation. And if/when Teletrade and/or Heritage bid on coins that others have consigned to auction, that is NOT shill bidding.

 

Mark, what would it be called then? They have a double interest - they are auctioning the coin for buyer and sellers fees, and they are bidding on those coins? They have every incentive to get the bid up because the higher it goes, the more they make. Isn't that a shill? I don't know if they are doing this just repeating allegations from jackson64, but if this is so, it is very disturbing, or is it justified somehow? Seems like a very clear conflict of interest if the house bids on its own auctions.

If an auction house bids on consignors' coins and wins them at prices that are too high, the extra commission they made due to the higher price realized, will be more than offset by their bad purchase.

 

A number of auction companies include in their terms of sale, language that they might place bids on consignors' coins, including those that they have consigned. I don't call it shilling, but you and others are free to do so. Either way, they disclose it and are not secretive about it.

 

Mark,

 

What I don't understand is why a consignor would agree to allow this. Let's suppose that I have a coin that I want sell, and I offer to sell it to ABC Auction Co. for $1000. They decline to buy it outright but agree to put it in their auction. Then, they bid on it and win it for $1000, but ABC charges a seller's premium of 15%, so instead of me getting $1000, I only get $850.

 

Chris

Chris, auction companies don't typically buy coins - they sell consigned ones. Yes, a seller might do better or worse by consigning to an auction than by selling outright.

 

As a consignor to an auction house, I much prefer that the auction house be allowed to place bids - it can only help consignors, not hurt them.

 

I guess I'm just too dense. If an auction company doesn't typically buy coins, then why would they bid on them? And, if they happen to be the high bidder, what then? Do they pay less for the coin because they can deduct their percentage?

I guess bidding on a coin, whether or not they have any intention of trying to win it, is different from buying a coin.

 

Chris

Heritage auction company doesn't bid on and buy coins, buyers for the rare coin company division of Heritage do. I don't know if they pay less or not for their wins, but if they do, it means the auction division nets less, to offset it.

 

Okay! I'm learning slowly but surely, so please bear with me.

 

Heritage Auctions and Heritage Rare Coins are two divisions within the corporate structure. Let's assume that HA does not charge HRC a buyer's or seller's fee on any auction transaction, and it is simply recorded as an appropriate debit/credit notation on the financial statements.

 

HRC declines to purchase the coin, and it is consigned to HA where HRC bids and wins it for $1K. HA charges the consignor 15% (I don't know what the actual percentage should be.) In effect, they would be getting a $1K coin for the $850 which is paid to the consignor.

 

So, let's take it one step further. Suppose that HRC places the coin in the next HA auction, and once again, it sells to another buyer for $1K. Again, HA charges the buyer $150. HA has now made $300 for the corporate structure on a $1K coin, for which, HRC only paid $850. Instead of receiving a combined 30% in buyer's and seller's fees, the corporate structure has received 35.3%.

 

Does this make sense?

 

Thanks for putting up with me.

 

Chris

 

Chris, yes, it can be said that as bidders in Heritage Numismatic Auctions sales, Heritage Rare Coin Galleries has an advantage over other bidders. But, as I said previously, you might do better or worse by consigning, vs. selling outright. And, it's not as if you have to offer coins only to Heritage or consign, only to Heritage. If that were the case, I could understand your concern a lot better.

[cpm9ball]

I have heard rumors, and I've never researched it to know if it is true, that Heritage and Teletrade are both partially owned or in business with NGC. I also know that Teletrade and Heritage bid on the coins that people send for auction ( which in itself is straight up schill bidding)..These big auction companies also solicit raw coins and offer to send them for slabbing before auction....

 

Oh what a tangled web they weave...so yes, it actually IS possible that TPG's may also be grading coins that they draw profits from when sold........

I am confident that NGC and Teletrade have no such affiliation. And if/when Teletrade and/or Heritage bid on coins that others have consigned to auction, that is NOT shill bidding.

 

Mark, what would it be called then? They have a double interest - they are auctioning the coin for buyer and sellers fees, and they are bidding on those coins? They have every incentive to get the bid up because the higher it goes, the more they make. Isn't that a shill? I don't know if they are doing this just repeating allegations from jackson64, but if this is so, it is very disturbing, or is it justified somehow? Seems like a very clear conflict of interest if the house bids on its own auctions.

If an auction house bids on consignors' coins and wins them at prices that are too high, the extra commission they made due to the higher price realized, will be more than offset by their bad purchase.

 

A number of auction companies include in their terms of sale, language that they might place bids on consignors' coins, including those that they have consigned. I don't call it shilling, but you and others are free to do so. Either way, they disclose it and are not secretive about it.

 

Mark,

 

What I don't understand is why a consignor would agree to allow this. Let's suppose that I have a coin that I want sell, and I offer to sell it to ABC Auction Co. for $1000. They decline to buy it outright but agree to put it in their auction. Then, they bid on it and win it for $1000, but ABC charges a seller's premium of 15%, so instead of me getting $1000, I only get $850.

 

Chris

Chris, auction companies don't typically buy coins - they sell consigned ones. Yes, a seller might do better or worse by consigning to an auction than by selling outright.

 

As a consignor to an auction house, I much prefer that the auction house be allowed to place bids - it can only help consignors, not hurt them.

 

I guess I'm just too dense. If an auction company doesn't typically buy coins, then why would they bid on them? And, if they happen to be the high bidder, what then? Do they pay less for the coin because they can deduct their percentage?

I guess bidding on a coin, whether or not they have any intention of trying to win it, is different from buying a coin.

 

Chris

Heritage auction company doesn't bid on and buy coins, buyers for the rare coin company division of Heritage do. I don't know if they pay less or not for their wins, but if they do, it means the auction division nets less, to offset it.

 

Okay! I'm learning slowly but surely, so please bear with me.

 

Heritage Auctions and Heritage Rare Coins are two divisions within the corporate structure. Let's assume that HA does not charge HRC a buyer's or seller's fee on any auction transaction, and it is simply recorded as an appropriate debit/credit notation on the financial statements.

 

HRC declines to purchase the coin, and it is consigned to HA where HRC bids and wins it for $1K. HA charges the consignor 15% (I don't know what the actual percentage should be.) In effect, they would be getting a $1K coin for the $850 which is paid to the consignor.

 

So, let's take it one step further. Suppose that HRC places the coin in the next HA auction, and once again, it sells to another buyer for $1K. Again, HA charges the buyer $150. HA has now made $300 for the corporate structure on a $1K coin, for which, HRC only paid $850. Instead of receiving a combined 30% in buyer's and seller's fees, the corporate structure has received 35.3%.

 

Does this make sense?

 

Thanks for putting up with me.

 

Chris

 

Chris, yes, it can be said that as bidders in Heritage Numismatic Auctions sales, Heritage Rare Coin Galleries has an advantage over other bidders. But, as I said previously, you might do better or worse by consigning, vs. selling outright. And, it's not as if you have to offer coins only to Heritage or consign, only to Heritage. If that were the case, I could understand your concern a lot better.

 

It's not a great concern, but I was just trying to understand the scenarios that might take place. Heritage isn't any different from any other (numismatic or otherwise) company. They are in business to make a profit, and should always be looking for ways to maximize that profit without risking the loss of their clientele.

 

However, the same can be said for the consignor. If a consignor had a quality collection to place at auction, why shouldn't he try to maximize his return as well? Granted, you can't force people to bid what you would like to get for the collection, but why couldn't they negotiate better terms with the auction company? Is this ever done?

 

Chris

[physics-fan3.14]

Loving the 20-nested quotation of the entire thread in each post, guys.

[comicdonna]

It's not a great concern, but I was just trying to understand the scenarios that might take place. Heritage isn't any different from any other (numismatic or otherwise) company. They are in business to make a profit, and should always be looking for ways to maximize that profit without risking the loss of their clientele.

 

However, the same can be said for the consignor. If a consignor had a quality collection to place at auction, why shouldn't he try to maximize his return as well? Granted, you can't force people to bid what you would like to get for the collection, but why couldn't they negotiate better terms with the auction company? Is this ever done?

 

Chris

You can negotiate better terms with Heritage.

[MarkFeld]

I have heard rumors, and I've never researched it to know if it is true, that Heritage and Teletrade are both partially owned or in business with NGC. I also know that Teletrade and Heritage bid on the coins that people send for auction ( which in itself is straight up schill bidding)..These big auction companies also solicit raw coins and offer to send them for slabbing before auction....

 

Oh what a tangled web they weave...so yes, it actually IS possible that TPG's may also be grading coins that they draw profits from when sold........

I am confident that NGC and Teletrade have no such affiliation. And if/when Teletrade and/or Heritage bid on coins that others have consigned to auction, that is NOT shill bidding.

 

Mark, what would it be called then? They have a double interest - they are auctioning the coin for buyer and sellers fees, and they are bidding on those coins? They have every incentive to get the bid up because the higher it goes, the more they make. Isn't that a shill? I don't know if they are doing this just repeating allegations from jackson64, but if this is so, it is very disturbing, or is it justified somehow? Seems like a very clear conflict of interest if the house bids on its own auctions.

If an auction house bids on consignors' coins and wins them at prices that are too high, the extra commission they made due to the higher price realized, will be more than offset by their bad purchase.

 

A number of auction companies include in their terms of sale, language that they might place bids on consignors' coins, including those that they have consigned. I don't call it shilling, but you and others are free to do so. Either way, they disclose it and are not secretive about it.

 

Mark,

 

What I don't understand is why a consignor would agree to allow this. Let's suppose that I have a coin that I want sell, and I offer to sell it to ABC Auction Co. for $1000. They decline to buy it outright but agree to put it in their auction. Then, they bid on it and win it for $1000, but ABC charges a seller's premium of 15%, so instead of me getting $1000, I only get $850.

 

Chris

Chris, auction companies don't typically buy coins - they sell consigned ones. Yes, a seller might do better or worse by consigning to an auction than by selling outright.

 

As a consignor to an auction house, I much prefer that the auction house be allowed to place bids - it can only help consignors, not hurt them.

 

I guess I'm just too dense. If an auction company doesn't typically buy coins, then why would they bid on them? And, if they happen to be the high bidder, what then? Do they pay less for the coin because they can deduct their percentage?

I guess bidding on a coin, whether or not they have any intention of trying to win it, is different from buying a coin.

 

Chris

Heritage auction company doesn't bid on and buy coins, buyers for the rare coin company division of Heritage do. I don't know if they pay less or not for their wins, but if they do, it means the auction division nets less, to offset it.

 

Okay! I'm learning slowly but surely, so please bear with me.

 

Heritage Auctions and Heritage Rare Coins are two divisions within the corporate structure. Let's assume that HA does not charge HRC a buyer's or seller's fee on any auction transaction, and it is simply recorded as an appropriate debit/credit notation on the financial statements.

 

HRC declines to purchase the coin, and it is consigned to HA where HRC bids and wins it for $1K. HA charges the consignor 15% (I don't know what the actual percentage should be.) In effect, they would be getting a $1K coin for the $850 which is paid to the consignor.

 

So, let's take it one step further. Suppose that HRC places the coin in the next HA auction, and once again, it sells to another buyer for $1K. Again, HA charges the buyer $150. HA has now made $300 for the corporate structure on a $1K coin, for which, HRC only paid $850. Instead of receiving a combined 30% in buyer's and seller's fees, the corporate structure has received 35.3%.

 

Does this make sense?

 

Thanks for putting up with me.

 

Chris

 

Chris, yes, it can be said that as bidders in Heritage Numismatic Auctions sales, Heritage Rare Coin Galleries has an advantage over other bidders. But, as I said previously, you might do better or worse by consigning, vs. selling outright. And, it's not as if you have to offer coins only to Heritage or consign, only to Heritage. If that were the case, I could understand your concern a lot better.

 

It's not a great concern, but I was just trying to understand the scenarios that might take place. Heritage isn't any different from any other (numismatic or otherwise) company. They are in business to make a profit, and should always be looking for ways to maximize that profit without risking the loss of their clientele.

 

However, the same can be said for the consignor. If a consignor had a quality collection to place at auction, why shouldn't he try to maximize his return as well? Granted, you can't force people to bid what you would like to get for the collection, but why couldn't they negotiate better terms with the auction company? Is this ever done?

 

Chris

Yes, the seller's commission can absolutely be negotiated. Among other things, it depends upon the nature of the consignment (value, desirability, etc.), whether the coins are being sold unreserved or not, if not, what % of the value of the coins meet reserve, the relationship of the consignor with the auction house and the knowledge of the aforementioned on the part of the consignor.