The art market

For the last few years, the media have trumpeted contemporary art as the hottest new investment. At fairs, auction houses and galleries, an influx of new buyers--many of them from the world of finance--have entered the fray. Lifted by this tidal wave of new money, the number of thriving artists, galleries and consultants has rocketed upwards. Yet amid all this transformative change, one element has held stable: the art market's murky modus operandi. In my experience, people coming from the finance world into the art market tend to be shocked by the level of opacity and murkiness," says collector Greg Allen, a former financier who co-chairs MoMA's Junior Associates board. "Of course, there's a lot of hubris--these people made fortunes cracking the market's code, so they tend to think the opacity is someone else's problems. But the mechanisms are not in place to eliminate ethical lapses or price-gouging, and the new breed of collectors is definitely more likely to pursue legal options. And once things go to court, a lot of the opacity gets shaken out." The art trade is the last major unregulated market," points out Manhattan attorney Peter R. Stern, whose work frequently involves art-market cases. "And while it always involved large sums of money, there was never the level of trading and investing that we have now. I'm increasingly approached by collectors who have encountered problems." Stern represented collector Jean-Pierre Lehmann in his winning case against the Project Gallery, which captivated the art world by revealing precisely what prices and discounts Project Gallery Chief Christian Haye had offered various collectors and galleries on paintings by Julie Mehretu--information normally concealed by an art world omerta. --Time To Reform The Art Market? by Marc Spiegler for The Art Newspaper, 2006.