Christie’s followed suit, agreeing to pay the same sum of money in an out-of-court settlement between the lawyers of both auction houses and the lead counsel representing a fixed number of named plaintiffs but, under US law, also taking in the remainder of the 120,000 clients who have bought and sold in the United States.
This means that even those who have not personally pursued redress under the US law will find themselves in receipt of a cheque. Sotheby’s board moved quickly to settle the case, holding an emergency meeting on September 23 to decide how they should pay the quarter billion dollar charge.
The company made a net profit of $32.9m last year.
Eventually, billionaire ex-chairman Alfred Taubman, who holds the majority of the class B voting shares, agreed to pay $156m towards the settlement. In return, he would not have to face any potential claims from the company in the United States. As far as the other $100m is concerned, Sotheby’s will be issuing half of the sum in commission discount coupons to vendors (Christie’s are entitled to do the same under the settlement) leaving the company a final $50m to find.
Christie’s decided to follow the same path as Sotheby’s on Tuesday, September 26.
In a separate issue, Sotheby’s also settled a class action lawsuit from shareholders aggrieved by the 50 per cent drop in their stock value after the collusion scandal became public in January this year. The compensation to shareholders was agreed at $30m, and Mr Taubman will pay the entire sum.
Additionally, Sotheby’s will be issuing $40m in the non-voting Class A common stock to shareholder plaintiffs. News of the civil case deal sent Sotheby’s stock up by 87.5 points on the London stock exchange this morning amid speculation that the criminal case, too, might soon be closed and a take-over bid for the company tendered.
Christie’s agreed to co-operate with the US Justice department’s investigation into alleged collusion between the two auction houses in return for amnesty, but Sotheby’s remain at risk of criminal prosecution. Sotheby’s issued a statement on Monday saying that it had entered negotiations with the Justice department and “was optimistic that a mutually acceptable resolution will be reached in the near future”.
None of the settlements reached or proposed affects possible actions outside the United States.
Sotheby’s move to settle class action claims
Sotheby’s board of directors have approved payment of $256m to clients in the civil lawsuit which claimed collusion with Christie’s in setting charges for buyers in 1992 and sellers in 1995.