A judge formally accepted a plea deal by Sotheby’s auction house that calls for a $45 million fine after the company admitted to an antitrust conspiracy to cheat its buyers and sellers, the Associated Press (AP) reported.
The deal was made several months ago as Sotheby’s former chief executive pleaded guilty to fixing commission prices and fees with rival Christie’s auction house.
U.S. District Judge Lewis A. Kaplan had refused to accept the plea until he received more information about the company’s finances.
Kaplan previously called the scheme worked out between former CEO Diana D. Brooks and top executives at Christie’s an “especially serious case” worked out at “an extremely high level,” the AP reported.
Brooks is awaiting sentencing.
Steven Reiss, a lawyer for Sotheby’s, said the payment of the fine and the settlement reflects a “strong desire to make things right with our buyers and sellers,” the AP reported.
He added that Sotheby’s was about to settle a shareholder’s lawsuit for $70 million. He said that because Christie’s cooperated early with the Justice Department and escaped criminal prosecution, Sotheby’s was being “asked to shoulder a disproportionate share of the burden.”
Sotheby’s, along with Christie’s, controls 95 percent of the $4 billion worldwide auction market in everything from furniture to antiques to fine arts.
As part of the plea deal, federal prosecutors have promised not to charge any current or former employee of Sotheby’s other than Brooks and her one-time boss, former Sotheby’s chairman A. Alfred Taubman. Both resigned in February.
Kaplan also is close to accepting a $537 million settlement in a civil damages case brought by victims of the scheme. The money will be divided evenly by both auction houses.
The judge had originally delayed accepting the company’s plea because he said it was unusual because it carried a mandatory $45 million fine for Sotheby’s and a promise of no restitution.
According to prosecutors, Brooks and other coconspirators agreed to raise prices by fixing sellers’ commissions, participated in meetings to discuss the commissions and even agreed which auction house would publish its nonnegotiable sellers commission schedule first.
From April 1993 until last February, Sotheby’s made more than $225 million from seller’s commissions, court documents say. The coconspirators were not named.
In October, Sotheby’s pleaded guilty to a multimillion-dollar price-fixing scheme with Christie’s and agreed to pay a $45 million criminal fine, but Kaplan delayed action on Sotheby’s plea to consider whether victims will be adequately compensated through the civil settlement.
A different judge did accept the guilty plea entered by former Sotheby’s President and Chief Executive Diana Brooks. Under the plea agreement she will cooperate with the government in its three-year criminal probe. She is scheduled for sentencing in May.