Commentary: Short of the Mark
by Dan Liebman
Date Posted: 10/16/2007 9:42:35 AM
Last Updated: 10/20/2007 11:48:39 AM

Dan Liebman Editor-in-Chief
Photo: File Photo

The preliminary recommendations of the Sales Integrity Task Force were released Oct. 15, and though the diligent work of the group is admirable, it fell far short of providing a strong blueprint for needed changes in the public auction arena.

The 36-member panel was handed a difficult task, to find consensus among breeders, owners, consignors, buyers, agents, and sale companies. The action was mandated by the Kentucky General Assembly, which agreed to table legislation to see if the industry could instead propose systems to police itself.

Indeed, the task force has recommended self regulation through additions to the conditions of sale, a move endorsed by both Keeneland and Fasig-Tipton.

That such a diverse group, each with its own interests, was able to come together is in itself an accomplishment, but it is unlikely the recommendations will satisfy legislators who are sick and tired of hearing stories about kickbacks, dual agency, and chicanery.

The task force was split into three committees:

• Licensing of Agents and Consignors—The group is suggesting a code of conduct which, among other things, spells out seven specific situations when an agent must disclose information to his or her principal. Should a breach of the code be alleged, and the parties unable to settle their dispute, the matter would be submitted to the American Arbitration Association. Serious sanctions could be imposed if a violation is found to have occurred.

Committee members veered away from state licensing of agents, in part because of some concern it would be a burden for persons living outside the United States.

The fact is, if these same persons wish to race a horse in Kentucky, they must first receive an owner’s license. It would be just as easy to license agents, without being burdensome.

• Ownership Disclosure—The committee suggests establishing an ownership registry, but disclosure of who owns a horse at the time it is sold would remain voluntary. While the committee also addressed change of ownership after a catalog is printed and after a horse arrives on the sale grounds, it is the disclosure issue that is paramount to the entire exercise.

The title of the recommendation from this committee begins with the word “transparency,” so where is the transparency in voluntary disclosure?

Committee members looked at the practices of other industries such as securities and art. The fact is a horse is different because it is a living, breathing animal. A buyer has the right to know who owns the horse he is bidding on.

A breeder may place horses with multiple consignors, which is his or her right, but with disclosure, buyers will know this fact.

If you think those with interests in stallions don’t place horses with various consignors and run up the prices to inflate stallion averages, you haven’t been paying attention.

Some owners claim disclosure would supersede their right to privacy, but one wonders why they wouldn’t want buyers to know they own the horse in the ring.

• Medication Disclosure—The committee recommends disclosure of medical information but does not demand it. Though X-rays are included by many sellers in repositories, some surgical procedures do not have to be disclosed.

The committee recommends horses not be administered anabolic steroids within 45 days of sale. Buyers may request drug tests, and the presence of anabolic steroids “may” result in a horse being turned back. The group also recommends horses not be injected behind the knee.

The committee tackled the most obvious drug group in anabolic steroids but stopped short of including other medications used on sale horses, and in addressing all surgical procedures.

The Thoroughbred industry is the state of Kentucky’s most important business. It should be operated under complete transparency. These recommendations fall short of that.

 



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