Our topic today regards if — and when — do auctioneers become involved in situations where they have a conflict of interest. As well, we hope to clarify that just because there is a conflict of interest, it doesn’t mean there is any impropriety.
A common definition of “conflict of interest” is, “a set of circumstances that creates a risk that professional judgment or actions regarding a primary interest will be unduly influenced by a secondary interest.”
Fortunately, the mere conflict is not a crime, but rather it creates a risk of improper action. The crime is improper action, not the conflict itself.
I would submit that conflict of interest situations are common and interwoven into nearly every personal and business relationship. I would also submit that many are managed appropriately.
Take a look at these common circumstances where auctioneers find themselves: Let’s say an auctioneer …
Receives an absentee bid of $10,000 to be executed competitively, thus any bid for less than $10,000 reduces his possible commission.
Is interested in an upcoming lot in his auction and yet takes bids from other bidders against himself.
Runs for office in his state association obviously helping to promote himself and his own auction company while his directive would be to advocate for all members.
As can be seen here, all of these aforementioned situations represent a conflict of interest, but not any crime nor impropriety if managed properly.
In a recent case, an attorney asked me on the witness stand, “So that would be a problem in that it represents a conflict of interest?” My answer was, “Not necessarily.” He was not pleased with my evaluation.
I reminded this attorney he was probably in a conflict of interest situation at that very moment — the sooner this case was settled, the less cost to the client, but the less profit to the law firm. He moved to strike that comment.
Next time you as an auctioneer find yourself in a “conflict of interest” situation, know that these types of circumstances indeed occur, and your behavior is what matters, not the conflict itself.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.
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