February 23, 2000
Sotheby's Troubled by Price-Fixing Allegations
Sotheby's stock fell Tuesday to a one-year low following the resignations of two top executives. On Monday, Sotheby's announced Alfred Taubman, chairman of the board, and Diana Brooks, president and CEO, had left the company. It gave no reason for the departures, though they come on the heels of Sotheby's earlier announcement that the outcome of
various antitrust investigations and civil class action complaints could have
a significant effect on profits.
Antitrust investigations continue in Britain, Australia and the U.S. into whether the auction house and its main rival, Christie's, fixed sale commissions.
Wall Street initially "took a fancy" to Sotheby's last year when it announced an initiative to set up an online auction house selling jewelry, among other items, financial analyst Charles Campbell of Miller & Tabak & Co., New York City, told Reuters. But the investors' love affair may have soured by the allegations of price fixing. Christie's is a privately held company.
Campbell said suggestions of collusion on prices were not so surprising, considering the high share of the auction market enjoyed by Sotheby's and Christie's. "(Sotheby's) image and reputation will be somewhat damaged. Former management will still obviously have some influence over the company and it is unclear how much of this is form and how much is substance," he said.
Sotheby's said Monday it recently met with the U.S. Department of Justice to
discuss "prompt and appropriate resolution" of the investigation into its alleged fixing of commissions.
Taubman took the helm at Sotheby's in 1983 and will keep a seat on the board. Brooks, who joined Sotheby's in 1979, had been president and CEO since 1994. Michael Sovern, a former president of Columbia University in New York City, will serve as the new chairman of the board. William Ruprecht will become president and CEO.
- by Mark E. Dixon