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The damage to the auctioneers' reputation could be equally severe. Their woes fall at a time when they seemed to be growing ever richer and more powerful. The art market had rebounded; sales were up. Both firms had invested in glossy and expensive new Manhattan headquarters. Sotheby's fortunes, particularly, were expansive, as it opened outlets in Amsterdam and Zurich and spent more than $40 million to make itself a presence on the Internet, including a partnership with Amazon.com Accordingly, Sotheby's has taken the greater fall. Its stock, which was at 47 last April, closed last Friday at 19.5, after sinking as low as 14.5 earlier in the week. And its tarnished image prompted rumors that it might be a takeover target for French financier Bernard Arnault, head of the luxury-goods conglomerate LVMH Moet Hennessy Louis Vuitton. If Arnault acquired Sotheby's, it would afford him yet another confrontation with his archrival, French investor Francois Pinault, who has owned Christie's since 1998.
What longer-term effect the scandal may have on the auction industry is far from clear. Christie's has already announced a new fee structure, raising the amount buyers must pay to 17.5% on the first $80,000 and 10% above that but reducing the seller's commission for customers who buy a lot of art. The art world awaits Sotheby's response. "We will not be underbid by Christie's," new chairman Sovern told TIME, "and we are reviewing our fee schedules to make sure that we are as competitive as we need to be."
Dealers of course hope that clients will buy more through them and less at auction. Collectors, says gallery owner Howard Read, prefer "a relationship with someone they know and can trust." Stephen Wirtz of San Francisco's Stephen Wirtz Gallery thinks the harm will be done by a free-floating unease. "Whenever there is some kind of seemingly blatant dishonesty, people will probably want to sell less at auction," he says.
But the houses are not without their defenders, like West Coast private dealer Aaron Shraybman, who says he is "saddened" by the affair and points out that "it's not like they tried to do something and cover it up. I don't think the Justice Department understands the breadth and scope of what the business is. They are just taking the law to its hardest form." Either way, the year 2000 opens a rocky time for art auctioneers, and it bids fair to let air out of, as well as into, their trade.
--With reporting by Daniel S. Levy and Aixa M. Pascual/New York