07/02/2004 11:00PM

Sanan calls for reforms on sales of Thoroughbreds


LEXINGTON, Ky. - Satish Sanan, the owner of Padua Stables and one of the decade's most powerful bidders at public auction, is calling on the Thoroughbred sales community to develop and enforce a code of ethics.

Sanan said Friday that he has been in communication with at least 50 people involved in Thoroughbred sales, discussing the need for industrywide standards governing public and private transactions. In a letter widely circulated last week among owners, consignors, bloodstock agents, and sale companies, Sanan focused on three major concerns: undisclosed cosmetic surgeries on sales horses, hidden ownership, and "dual agency," in which an agent represents both parties in a transaction, or benefits from both the buying and selling of a horse, without revealing that to the clients involved.

"At a very broad level, those are the things we're thinking about," Sanan said. "I think we have enough consensus among the various constituencies to get together. We are continuing to garner more support.

"We don't have any plan right now," he said, when asked what action he had in mind for what he calls the Alliance for Industry Reform. "We have been in contact with all the industry leaders from various constituencies, from sales companies to prominent consignors and owners, who are interested in working together to develop a code of ethics.

It was not clear Friday what other owners, breeders, or sellers might have signed on to Sanan's proposal. Officials at Keeneland and Fasig-Tipton acknowledged discussions with Sanan but gave no specifics.

Sanan, 56, is among the top yearling buyers in the world and has been an aggressive bidder since entering the major sale circuit in 1997. His purchases have included $2.15 million Vindication, the 2002 juvenile champion, and $1.2 million Cash Run, the 1999 Breeders' Cup Juvenile Fillies winner. In 2000, he spent $20,795,000 for 21 yearlings as North America's fourth-leading buyer by gross. He bought last year's top lot at Fasig-Tipton's Saratoga sale, a $2.7 million Unbridled-Words of War colt.

In his letter, addressed to "Thoroughbred owners and breeders," Sanan says that, "With racing's increasing popularity and its efforts to attract new owners to the sport, now is the perfect time to talk about it and create greater safeguards for investors, old and new."

Among the proposals Sanan has made are:

* Tightening what Sanan calls "a loophole" in the standard conditions of sale that, he said, does not require notice in the event a horse has ever had surgery to correct conformational faults.

* Disclosure of medications sales horses receive. Sales companies generally require disclosure of medications at juvenile sales, but public disclosures are rare in most jurisdictions for sales of horses younger than racing age.

* Ending the practice of allowing agents to buy and sell horses without disclosing who their clients are.

"Agents should be required to disclose on whose behalf they are working," Sanan wrote in his letter. "Moreover, by not publishing an accurate account of sale results reflecting horses that have been sold, or subsequently reported as unsold, the sale companies create a void of information that empowers those who have a policy of fraud and market manipulation."

Sanan calls for sales companies to require disclosure of all sellers involved in a horse, even if the horse's ownership changes hands immediately before the animal enters the auction ring, and full disclosure of the buyer's identity.

* Industry regulation of bloodstock brokers to require that they disclose all representations, fees, and commissions in equine transactions.

"Bloodstock agents have duties of loyalty, accounting, and disclosure, just like attorneys, real estate agents, and stock brokers, whose professions are all regulated," Sanan wrote. "If horse racing hopes to keep its current owners, and hopes to recruit new ones, these major changes will need to be made."

Representatives from both Keeneland and Fasig-Tipton said they had talked with Sanan about his concerns.

"We have had some discussions with Mr. Sanan, and he raises some interesting points and ideas that merit consideration and evaluation," said Fasig-Tipton chief operating officer Boyd Browning. "We have begun that process and will be speaking with many important people throughout the industry to evaluate those thoughts and ideas. We believe the integrity of the business is extremely important and believe it's important for the long-term success of our industry."

Keeneland offered a similar response, with spokesman Jim Williams saying: "There are complex issues that require input from all facets of the Thoroughbred business. We welcome the discussion. It is this type of dialogue that has helped us continually improve the Thoroughbred auction process. Our goal remains to conduct the sales with utmost integrity."