Ray Paulick<br>Editor-in-Chief

Ray Paulick

Ethics For Sale

Kentucky's two Thoroughbred auction companies, Fasig-Tipton and Keeneland, were not happy when the subject of ethics in the bloodstock market was broached here in an April 3, 2004, editorial ("Buyer Beware," page 1953).

Officials from the two companies requested to meet with me and Stacy Bearse, who as president and publisher of Blood-Horse Publications does not play an active role in the editorial positions of this magazine. The meeting, at the request of the sale companies, was "off the record," so I will not repeat anything that was said.

But take my word for it, they were not happy with the mere mention of fraud in the marketplace. Nor with my suggestion that sale companies were "looking the other way" on the occasions when an unsuspecting buyer has been cheated through undisclosed payments from consignor to buyer agent or some other form of unethical behavior.

Full disclosure: the comment that sale companies were looking the other way wasn't mine; it came to me from someone on one of their boards of directors.

Let's hope Fasig-Tipton and Keeneland are more open to change now that a group of people who have spent hundreds of millions of dollars at their sales (and not some editor who hasn't spent a nickel) are driving home the same point: that it is long overdue for the bloodstock industry to establish and enforce a code of ethics designed to eliminate fraud.

What I said in the editorial was that it's "about time someone stood up on behalf of the industry's biggest investors, the owners." The commentary apparently fell on deaf ears with industry organizations such as the Thoroughbred Owners and Breeders Association (owner of The Blood-Horse) and the National Thoroughbred Racing Association.

But one of numerous calls of support I received regarding the column (to counter the negative comments of some consignors, bloodstock agents, and sale companies) came from Satish Sanan, a relatively new Florida-based owner who said he was one of those people caught on the wrong end of a few bloodstock "deals." A letter to the editor from Sanan calling for reforms was published in a subsequent issue (April 17, page 2182), and he in turn was contacted by many people telling him their own tales of woe and supporting his position.

That got the ball rolling, and Sanan has worked tirelessly since then to gather the critical mass that will be needed to convince an industry whose longtime motto was "buyer beware" to join the 21st century's emphasis on transparency and disclosure. The open letter to the industry, dubbed the "Alliance for Industry Reform," written by Sanan after speaking with many owners, breeders, consignors, agents, and sale company officials, is published as a paid advertisement on page 3811.

Obviously, Sanan and a small support team were not able to contact everyone who has ever bought or sold a horse, so the signatures of support on that letter only represent a small sample of people who believe the time for bloodstock market reform is now. Sanan also has convinced the aforementioned TOBA to consider taking a lead role in this area.

I suspect the sale companies are bothered by the timing of the Alliance for Industry Reform's letter, coming as it does at the beginning of the yearling sale season. But this should be looked upon by them and their consignors as good news, especially for the long term.

A code of ethics with enforcement will help curtail whatever amount of fraud is currently taking place (and it is not suggested here that it is widespread). That will instill greater confidence in the marketplace, keeping owners in the game longer and making it a more attractive and less intimidating industry in which potential new owners may participate.

The final point is something on which we can all agree.