Sotheby's shares fall 10% after its promises

Sotheby's shares have declined almost 10 percent since Oct. 26 as the company neared this week's New York auctions after promising sellers fixed prices for paintings by Vincent van Gogh, Francis Bacon and Mark Rothko.

Sotheby's Nov. 14 contemporary art sale, which it values at about $220 million to $284 million, has guarantees equal to about 78 percent of the low estimate, said analyst Kristine Koerber of JMP Securities.

"If they have huge guarantees, and there are a lot of unsold lots, it could have a ripple effect on the contemporary art market," said New York art dealer Richard Feigen, who has sometimes invested in Sotheby's stock.

Guaranteed minimum prices draw art sellers by transferring the risk of a drop in the market to the auction house.