In August of 2004, I was asked to be Chairman of an industry task force made up of leading breeders, consignors, owners, vets, and sales personnel - the purpose was to come up with a Code of Ethics, primarily concerning conduct at Thoroughbred auction sales. This initiative, of course, invited national press scrutiny.
An enormous amount of work went into this effort, and in December we announced our recommendations concerning (1) accepted veterinary practices, (2) dual agency and (3) full disclosure.
This Code of Ethics was needed. It was healthy to examine and focus the spotlight on any wrongdoing that exists among agents and consignors. However, I would point out very strongly that I have been in the Thoroughbred business for 35 years and have never been cheated. I think the integrity of the Thoroughbred industry is as strong as any industry.
But, there are people in every industry that seek to take advantage of newcomers.
It is a shocking fact that many people come into our industry with incredibly impressive business credentials, yet their enthusiasm for participating in racing is so great (thank goodness) that they tend to leave their brains at the door, and hook up with the first agent or trainer they bump into, without doing the due diligence they would have procedurally done in their previous business. Some of these people have been taken to the cleaners, and it is a shame, and we must do everything we can to eliminate that.
In racing we have no central point of control - no all-powerful Commissioner as exists in basketball, golf, football and baseball. Therefore, we were unable to come up with an ironclad method of putting "teeth" into our Code. The "teeth" had to come from (1) due diligence to begin with, (2) a written contract with any agent engaged, and (3) legal action if the buyer felt that he had been violated.
In recent months there has been a high visibility lawsuit on behalf of Mr. Jess Jackson, a wealthy new horse owner. He has taken action against agents and trainers he felt had taken kickbacks. Without any comment on the merits of the case, I do applaud the fact that legal action has been taken. Should it result in a finding in Mr. Jackson's favor, it will do a great deal to retard any other nefarious practices in the future. Even if the case does not go his way, it focuses attention on the fact that legal instruments should exist before a buyer-agent relationship is forged.
Generally, the sales companies in America - good friends of mine - have tended to drag their feet in promoting this Code of Ethics. Some have been dilatory in exhibiting the barn signs that they agreed to put up. These signs list those practices that are in violation of the Code, and the signs are designed to serve as a retardant for unscrupulous agents seeking under the table commissions.