What's the ethical thing to do?

Wow, what a hard question to consider. I am not a dealer, just a collector/hoarder, so I can see myself in the place of the seller. If the dealer never mentions it to the seller, the seller is not hurt and life goes on for him. The dealer, on the other hand, can congratulate himself on a great deal and may or may not lose sleep over it. If the dealer does have it reslabed as an MPL and sells it for big bucks, he could contact the seller and just say that he got much more for it than he initially thought he would (mostly true) and wants to share with the seller. Now since the dealer was the one bearing the bulk of the (I want to say risk here, but that is not quite the word I want), he should get the lion's share of the profit and is under no obligation to let the seller know all the behind the scene goings on. The seller should be happier than he was and have increased confidence in the buyer and the buyer has a clearer conscience. I'll stop here since it could go on as long as one of Detecto's posts.

 

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Sorry but it is the seller's loss.

 

Lots of variables to consider. I would put weight on why the seller is selling. Since they have an established repartiore I think the 'why' should be considered.

Is he selling to raise money for a charity or non profit? If so, new owner should go the American Pickers route and give back a chunk, writing it off as a charitable donation.

They are supposed to have an established relationship, and that should count for something as well.

Otherwise, I agree that the dealer should not be expected to share in the windfall. After all, he could have just sold it as-is.

It seems like you are disappointed in the dealers attitude. Is this one of those situations where 'ya think ya know a guy...' Depending on how strongly you feel, maybe your weight could tip the scales if you mention that you may be less inclined to render assistance in future? Are you paid for your attribution services with this dealer?

 

Mike, if you feel so strongly in all of this, just tell the seller your thoughts and let the two of them settle it. If you don't want to get involved, then don't get involved.

 

I know of dealers that rebate sellers on deals such as this but it's not the normal.
I would probably do it just to see the look on the sellers face when I handed him the cash.
I'm shocked ANACS missed an MPL but understand they have had many changes over the years.

 

Well...

OK, fair enough... the dealer is appraising the seller as someone who has a large enough collection of worthwhile coins, that if they have a good relationship, the dealer with the seller.... that more coins will be proferred. In other words, this may (or may not) turn out to be a long term relationship. Evidently, the dealer would like it to be so, based on your wording. So.... part of the ethical thing would be to have an honest relationship with the seller.

If the dealer had bought it because it was labeled MS-66 RD and he suspected at time of purchase it was a mpl, and primarily purchased it because it could be one but if it wasn't then no real loss of his time (and obviously, the seller didn't have that knowledge) --- i.e. on speculation... then the dealer is simply taking advantage of a seller with whom he wants to have a continuing business relationship with and is not being ethical, IMO. The dealer is 'the expert' as to value and all. But..... the seller is likely not to know, and can be taken advantage of.

Possibly the mislabelling is unfortunate, but the dealer should have the obligation to ensure that he is buying a correctly slabbed coin. If this dealer simply is purchasing off the slab's rating (buying the slab, not the coin) then why is he doing so? He should have looked at the coin in the slab and before purchasing it gotten back to the seller to explain that he would buy this coin as a MS 66 RD (as slabbed), but he would also be checking to see if it was more valuable proof strike (if he already at time of purchase suspected that) and if it turned out to be that, he would have to have it professionally graded again to get the results.... or something along that line. The dealer should if he has the means to, educate the seller some. But he could also say to the seller that he would be the one taking the risk, as it costs money to get further authenticating and its no guarantee it would. Then they could have struck a deal that if it did turn out to be a mpl, some more money would go to the seller.

That would be ethical.

That time has passed. So..... did the dealer buy it primarily because he thought it was (99% sure, so to speak) a mpl and not a regular strike and he was cherry-picking his seller? Then, he was not ethical. But if he purchased it because it was the MS66 RD and only later began to suspect it could be MPL, then maybe there is no real ethics problem. Just a problem of what to do after the fact....

 

Since when do dealers make a habit of reporting back with buyers how much profit (or loss) they make off the coins they have purchased from someone?

 

I'd say you shouldn't do business with this dealer anymore since its bothering you, forget it and move on.

 

My final point is that everyone who makes a purchase, especially dealers, feel(hopefully) that they got a good deal on it and that they could flip it for a profit. I see threads here all the time where we pat each other on the back, and rightly so, for getting good deals and cherry-picking. As long as no dishonesty and/or fraud was involved, and both parties agreed to the deal, then there is absolutely nothing wrong with flipping for a profit, no matter how great that profit might be. Let the seller take it up with ANACS. They are the ones he(or someone) hired for the specific purpose of assessing the coin, and they blew it.

 

+1. Here's a simple sentence that cuts straight to the premise involved.

 

Man, sounds like one of those concocted ethical questions for the MBA program.

Tough one. First, lets start off with the premise the dealer is the expert here. He is also a businessman. We also have as major considerations a TPG slab and the fact the dealer would like to keep the relationship because of further purchases that can be acquired.

I differentiate this scenario from previously conjectured grading difference scenarios. Yes, if a dealer decides to resubmit a coin in hopes of getting a 67 instead of a 66, I do not consider that to be anything he needs to tell the seller. A grade by a TPG is just an opinion of condition. This is different. Recognizing a coin as a matte proof is something an expert is supposed to be able to do. The dealer is the expert here, not the seller, not the TPG. If he recognizes a coin as something DIFFERENT, (a matte proof is fundamentally a different coin than a business strike, its not a matter of opinion like a grade is), I believe he has an obligation to pay the seller for the coin properly.

That small point, that this coin if its a matter proof is fundamentally a different good, is what changes this scenario for me. Because of that, if the dealer indeed did recognize this coin as a matte proof, he has an obligation to share a sizable portion of the proceeds with the seller. This is the ethical thing to do, and pragmatically as a buyer the dealer should do it as well to continue to be able to buy coins from the same seller. Many times in business what is ethical short term will cost you, but I find long term you usually profit from it as well.

Just my opinion. I know many will disagree, and believe the TPG slab changes this, but I simply believe morally if the dealer recognizes a incorrect TYPE of coin inside the slab, he cannot morally use the slab as an excuse.

Edit: Another scenario. What if the buyer had noticed that a nickel, instead of being a MS66 1912 was a 1912 S? What if the TPG mislabelled it? Would everyone still say that any profit in reslabbing is dealer profit only? This scenario to me is much more akin to the OP's scenario than simply a TPG grading difference. To me its more of a slab error or omission, which if the dealer notices, (and he should), he should be willing to pay what the COIN is worth, not what the SLAB is worth.

 

Right now the coin is an anacs-66rd, and the dealer and seller agreed to a fair price on that coin as-is, so the dealer has done nothing technically wrong.

The dealer could have said "this coin is $xx as-is graded, and I'll pay you that for it right now... but there is a small possibility it could be a more expensive variety, so if you want to accept $xx (being price minus attribution fees + his time) to see if it's worth more, we could do that too". This way the dealer is insulated for his profits, and the seller is making the active choice whether to take a chance on the coin or not on his own dime. The seller may not want to be bothered with it and just want the agreed upon as-is price and then all bets are off, but that should be his decision to make based upon all the proper information which he is trusting the dealer to give to him.

I think the main thing in question for me is whether the dealer knew 100% it was an MPL and knowingly withheld that information during the price negotiation. It seems the seller was relying on the dealer's knowledge because he didn't possess enough of his own, to me then the dealer is ethically in the wrong by taking advantage of that trust for his own gain, and should have notified the seller about the possibilities during the appraisals. If the seller walked in off the street and said "I want $xx for this anacs-66rd", took his money and walked out never to be seen again, then whatever the dealer finds is fair game. But, if the seller is asking for appraisals, value, and then selling, repeatedly, I think the dealer should be a little more helpful and honest.

 

Medoraman, you've nailed it! IMO.

 

The point I agree with you is that yes, everyone is looking for a good deal, and yes, we all take pride in making the good deal. The thing I disagree with is when someone uses their position and that inherent trust in that position to deceive someone or withhold important information for their own gain.

Why are lawyers supposed to excuse themselves in cases where they have any relationships with any of the parties? Because they have a pony in the race, and have something to gain if the case is won or lost and they have a way to influence the outcome in their favor by leveraging those relationships.

This is the same here. The dealer is being trusted for his honest evaluation of the coins, in an ongoing manner by the same buyer. The seller is not simply walking in and plopping down a coin to sell and then walking out after a negotiation. He's asking the dealer for his expert opinion, and then using that same opinion to sell the coins to that dealer. If the dealer is knowingly deceiving the seller by withholding information and then profiting excessively from it, he's taking advantage of his position and status and using it unethically against the buyer.

A coin that is worth $400, the dealer negotiates $250 and it's agreed on - that's a good business transaction.

A coin that could be worth $3k, the dealer knows this but doesn't disclose it after being specifically trusted to disclose exactly this type of information, and negotiates $250 - that's unethically taking advantage of someone.

 

And that's why I've repeatedly stated the caveat that as long as their was no dishonesty or fraud involved. The way I understand this situation, after directly asking, is that the transaction was simply made based upon the slab information.

 

Then I think we agree on that, no worries. I've inferred from Mike's posts that the dealer may have known, so maybe I've missed something else within this thread to the contrary.

 

I could be misunderstanding it too, and it may be that Mike didn't ask the dealer point-blank about that. If the seller asked the dealer's opinion about the coin, and the dealer knowingly withheld information, then I'm in agreement with you.

 

That is fair sir, but I have had a similar situation in business. We contracted for a certain grade of a commodity, with both parties under the assumption of that grade. When the commodity arrived, our professionals, (who had more knowledge in the area than the sellers), determined it was a much higher grade, (effectively turning it into a completely different good), than either of us thought. We discussed it internally, and we mailed the sellers another check for the difference.

Your point that the transaction was made based upon slab information could be correct, but will not change my opinion. If the transaction was done based upon slab information, and the expert in this situation, (the dealer), later finds out it was in error and the coin is in actuality mislabeled as to the TYPE of coin it is, I would view that as an invalid sale. Ethically, the sale should be reversed and renegotiated.

 

Not quite. As Medoraman explained above, if the coin is a matte proof, then it is a matte proof. It doesn't matter what the slab says.

To make it a little more obvious, what if I send a Chuck-E-Cheese token in for grading and it comes back in a slab identified as a 1925 Standing Liberty Quarter. The coin, obviously, is not a 1925 Standing Liberty Quarter, no matter what the TPG said.

For me, there isn't any question as to what I would do. I would call the seller and inform him of my discovery before resubmitting or selling it.

Here's an explanation of why I think this is the right thing to do. I work on computers. I sometimes do a little work on the side, mostly volunteer work. Let's say I was working on someone's computer and incorrectly identified a hardware fault as being the motherboard and advised the owner that it would not be cost effective to repair. They order a new computer, when it gets in I do a data transfer, and they let me take the old computer for recycling. When I get the computer home and start removing components I notice one of the memory DIMMs wasn't properly seated. I reseat the memory and the computer fires up just fine. Did I just "cherry pick" a computer? Is there no legal or ethical obligation to inform the previous owner?

Same thing happened in this case. The dealer improperly identified a coin, or was lazy and relied on someone else's identification, and now wants to profit from it without informing the seller. Worse yet would be if he knew the coin was improperly identified during the sale. That would be like me knowing the memory was improperly seated and telling the owner it was a bad motherboard. IMHO that would be nothing short of fraud.