What is (wrong with) “Chandellier Bidding?”

March 1, 2009

New York

ohn Flanagan, Republican state senator from New York, recently introduced legislation aimed at eradicating “chandelier bidding” at auction houses. Chandelier bids are nonexistent bids that auctioneers call out—usually with their gaze fixed at a point in the auction room that is difficult for the audience to pin down—in order to create the appearance of greater demand

Never gone to Vote

In a nutshel:

S. 2523--A                          2

    1    3.  NO  AUCTIONEER  OR AUCTION HOUSE MAY SOLICIT, ACCEPT, OR APPEAR TO
    2  SOLICIT OR ACCEPT SHAM BIDS UNLESS SUCH BIDS  ARE  IDENTIFIED  WITH  THE
    3  TERM "FOR THE CONSIGNOR".

 AN ACT to amend the general business law, in relation to  disclosure  of
         sham  bids  and  house  bids  at  public auctions and requirements for
         auction sale of advertised property; prohibited bids

         THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
       BLY, DO ENACT AS FOLLOWS:

    1    Section 1. The general business law is amended by adding a new section
    2  29 to read as follows:
    3    S  29.  SHAM  BIDS. 1. DEFINITIONS. A. THE TERM "SHAM BID", AS USED IN
    4  THIS SECTION, MEANS ANY BID FOR WHICH THERE IS NO  BONA  FIDE  OFFER  OR
    5  WHICH  IS NOT A BONA FIDE BID, ANY BID MADE BY OR ON BEHALF OF THE SELL-
    6  ER, AND BIDS COMMONLY KNOWN AS BUT NOT LIMITED TO "CHANDELIER", "CONSEC-
    7  UTIVE", OR "SUCCESSIVE" BIDS.

2005-2006 A. BRODSKY

A03514Prohibits acceptance of sham or chandelier bids by auctioneers without disclosure; requires absolute auction to sell to highest bidder

2003-2004M. of A. BRODSKY and S. Spano;

A01254Prohibits acceptance of sham or chandelier bids by auctioneers without disclosure; requires absolute auction to sell to highest bidder
S02523Prohibits acceptance of sham or chandelier bids by auctioneers without disclosure; requires absolute auction to sell to highest bidder

2000-2001 Term — M. of A. BRODSKY and S. Spano;

A01317Prohibits acceptance of sham or chandelier bids by auctioneers without disclosure; requires absolute auction to sell to highest bidder
S07324Prohibits acceptance of “sham” or “chandelier” bids by auctioneers without disclosure; requires absolute auction to sell to highest bidder

1999-2000 Term Introduced b M. of A. BRODSKY and S. Spano;

A03847Prohibits acceptance of sham or chandelier bids by auctioneers without disclosure

 22    3.  NO  AUCTIONEER  OR  AUCTION HOUSE MAY SOLICIT, ACCEPT OR APPEAR TO
   23  SOLICIT OR ACCEPT SHAM BIDS UNLESS SUCH BIDS  ARE  IDENTIFIED  WITH  THE
   24  TERM "FOR THE CONSIGNOR".

S07536Prohibits acceptance of “sham” or “chandelier” bids by auctioneers without disclosure22 3. NO AUCTIONEER OR AUCTION HOUSE MAY SOLICIT, ACCEPT OR APPEAR TO
```
   23  SOLICIT OR ACCEPT SHAM BIDS UNLESS SUCH BIDS  ARE  IDENTIFIED  WITH  THE
   24  TERM "FOR THE CONSIGNOR".
```

Sources:

Artnet; http://www.artnet.com/magazine/features/finch3/finch9-10-03.asp

Artnews; http://www.artnews.com/2007/09/04/legislators-seek-to-stop-chandelier-bidding-at-auction/

http://assembly.state.ny.us/leg

http://assembly.state.ny.us/leg/?bn=A03514&term=2005

2005-2006 Term; BILL NO A03514

A01254Prohibits acceptance of sham or chandelier bids by auctioneers without disclosure; requires absolute auction to sell to highest bidder
S02523Prohibits acceptance of sham or chandelier bids by auctioneers without disclosure; requires absolute auction to sell to highest bidder

Add SS29 &amp; 29-a, Gen Bus L

Prohibits the acceptance of chandelier bids or sham bids by auctioneers without
disclosure; requires "for the consignor" identification of such bids; requires
that property advertised to be sold at auction regardless of price ("absolute
auction") shall be sold to the highest bidder; requires disclosure of "auction
house bids" and prohibits acceptance of a bid made by or on behalf of the owner
or consignor of such property.

However, auctioneer may not start at the lowest minimum because it is bound by the confidentiality promise to the consignor and thus buyers will know and auctioneer will not be doing the service promised -- get the highest price.

Psychological
Theatrical
Historical

Introduced by Sen. Spano --