02/09/2007 1:00AM

Jackson backs more sale legislation

Email

LEXINGTON, Ky. - Jess Jackson is backing two more bills in Kentucky's legislature designed to prevent fraud in bloodstock transactions, including one that would require sellers to disclose a horse's ownership and whether it has been on anabolic steroids. But the move has raised concerns among some consignors and auction houses, who worry that the legislation is too broad in scope and no one will be able to comply with it.

House Bill 388, sponsored by Reps. Larry Clark (D-Jefferson) and Joni Jenkins (D-Jefferson), calls for owners and sellers at public auction to disclose each horse's ownership, including "the date the persons or entities acquired the equine or financial interest" in it, as part of information filed in the health-records repository on sale grounds. This is an attempt to prevent buyers from secretly purchasing all or an interest in a horse immediately before it is due to go through the sale ring. Some bidders contend that such scenarios leave them open to fraud if the secret purchaser then bids openly on the horse in the ring, pushing its price up. The conditions of sale at most major sales companies, including Keeneland and Fasig-Tipton, expressly allow sellers, disclosed or otherwise, to bid on their own horses.

Fasig-Tipton chief operating officer Boyd Browning noted that the Sales Integrity Task Force, which wrote a code of ethics in 2004, did not require ownership disclosure.

"However, they encouraged buyers to ask questions about that and any other information they feel is relevant before deciding to bid on a horse," he said. "That seems to have worked extremely well for all parties."

HB 388, sponsored by Jenkins, also requires owners or selling agents to disclose "the present medical condition of the equine, including whether or not the equine is presently under the care of a veterinarian and whether the equine's treatment includes the administration of therapeutic medications." And it calls for disclosure of "any medical condition for which the equine received the care of a veterinarian . . . including the administration of any anabolic steroid." The bill also would require sellers' certification that the horse isn't on any undisclosed anabolic steroid or medication at the time of sale.

Keeneland and Fasig-Tipton announced in January that they have formed a joint task force, supported by the Consignors and Commercial Breeders Association, to explore a possible testing protocol for anabolic steroids. Steroids can have legitimate therapeutic value, but some buyers and sellers alike have expressed concern that they can also be used to add muscle and bulk to an animal.

"I think it will be virtually impossible for consignors and owners to comply with, no matter how well-intentioned," Browning said.

Another bill introduced in Kentucky's House on Thursday, House Bill 367, adds a provision to legislation Jackson successfully pushed last year. That law, which Gov. Ernie Fletcher signed into law last March, made dual agency illegal in bloodstock transactions without express consent of buyer and seller. HB 367 would require payment and commission agreements between buyers and sellers and their agents be put into writing and be accompanied by a written bill of sale if they are to be considered enforceable.

"My personal opinion is that it's a little disappointing that Mr. Jackson continues to crusade on industry issues without building a consensus among industry members," said Bayne Welker, president of the Consignors and Commercial Breeders Association. The CBA board was to meet Friday afternoon to discuss the bills.

Kevin McGee, president of Jackson's Horse Owners' Protective Association, said the legislation originated with the legislature, when Clark contacted Jackson to review some ideas Clark had for increasing disclosure in the bloodstock business.

"The people that are pushing for this transparency are owners, buyers, and sellers who want to buy horses in Kentucky," McGee said. "It will help by leveling the playing field and improving the integrity of the industry. A lot of times there's speculation about a transaction that so-and-so bought the horse a half-hour before the auction and made a killing. That's a barrier to entry in the business for new buyers, and it reduces the confidence in the market for experienced buyers."

But the CBA's Welker said the legislation might make consignors vulnerable. Among the issues the CBA is likely to examine is whether such a law could require sellers to disclose all their financial records on a horse whether or not the buyer has formally alleged wrongdoing as part of a lawsuit. Welker also expressed concern that Jackson would try to push for the Kentucky Horse Racing Authority to oversee certain aspects of the sales, such as establishing threshold levels for steroids and medications in sale horses. "I don't feel we need more government in the process," he said.

But McGee said the legislation does not provide any role for the KHRA and does not call for any additional governmental regulation of the bloodstock market or for KHRA-administered drug testing.

"In fact, this is a way for the industry to police itself," he said. "If you're maintaining medical records for your horses, and most people are, this only requires some photocopying or summarizing records and placing them in the repository. The bills aren't prohibiting certain actions, they're just saying to disclose them. You can pump a horse full of anabolic steroids before a sale, you just would have to disclose that."

Jackson has brought a suit against several former bloodstock agents, alleging that they defrauded him by receiving secret kickbacks on horses they purchased for him.