Integrity No Easy Task
Date Posted: 1/12/2005 10:45:39 AM
Last Updated: 1/13/2005 8:24:00 AM

By Cot Campbell
Our Code of Ethics, presented to the world in mid-December, has been received agreeably. Predictably, there has been commentary on what "they" should have done. I have waited until Jan. 15--when my duties as chairman ended and the Thoroughbred Owners and Breeders Association took over--for any personal observations.

The other 21 members on the Sales Integrity Task Force represented some of the best minds, finest reputations, and highest levels of experience in our industry.

The rather formidable mission: eliminating, or at least minimizing fraudulent practices on the Thoroughbred auction scene. Our findings and recommendations could not possibly have been universally embraced, and there are two prevalent public concerns. One, I think, is warranted; the other tends to be inconsequential, when examined.

"Teeth. Where are the teeth? No penalties, no disciplinary provisions for violating the Code." This lament is valid. But developing a practical, legally feasible organization for accomplishing this is close to impossible.

Start with an industry that has no central power for punishing anyone in respect to criminal issues. Add the legal ramifications arising from matters of libel, and throw in the complications of 50 states, with each state having its own set of unique laws.

A regulatory structure similar to the National Association of Security Dealers would necessitate heavy involvement of the federal government. No one in his right mind would entertain this.

Folks, if this Task Force--in four months of conscientious effort, further energized by the zealous importuning of the indefatigable Satish Sanan--could not come up with a formal system for enforcing penalties, then there is no such animal.

We did the next best thing: We shined the spotlight on fraudulent practices, alerting old and new buyers they must perform due diligence on people they do business with, and we are providing a legal agreement for buyers to execute with their agents. Then if there is a violation, this creates a paper trail for legal action.

I understand the desire for a clean, clearly administered disciplinary procedure. And, if someone can set forth the workable--repeat, workable--details of such a plan, please come forth.

The other major concern is irrelevant, I feel, and has absolutely no effect on the "product" that is offered at sales. This is the subject of full disclosure of ownership.

The name of the game is to buy a good horse for good value. The fact that the owner does not wish his name disclosed does not in any way point to fraudulence. Follow this scenario:

I am a buyer (new or old). I select an honest agent to help me buy a yearling for, say, $300,000. Off to the sale I go with my agent; we inspect many, arrive at a short list, with "Horse A" at the very top. We smoke him over several times; have him vetted. X-rays and scoping results are checked in the repository. The colt is relatively flawless. He is good value for $300,000.

If I have gotten myself an honest agent, and if all of this is in place, it doesn't matter if the animal is owned by Attila the Hun.

There is no practical need to know the identity of the owner. It doesn't in any way change the product.

There are legitimate reasons for a buyer or seller to warrant privacy. Anonymity is respected in the art world, and internationally in Thoroughbred auctions. An example would be the CEO of a publicly traded company. Perhaps he would find that his purchase or sale of a million-dollar yearling would be viewed unsympathetically in the commercial sphere in which he toils.

Admittedly, if I were preparing to purchase an untried racehorse in the neighborhood of a million dollars, it might rankle me if any type of question I could think of was not answered. But if I were in any way uncomfortable with an answer, or lack of one, I should simply move on to another horse.

I hope, and believe, that the Code of Ethics will vastly improve doing business at Thoroughbred auctions in this country.

But it won't be a perfect world.

Dogwood Farm owner COT CAMPBELL was the head of the Sales Integrity Task Force.

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