Over the summer, the London-based company Showpiece announced it would offer fractional ownership of Banksy‘s mural Valentine’s Day Mascara. However, according to some experts from both the legal field and the art world, they may not be able to do so for much longer. Daniel Tunkel, a partner at the Memery Crystal law firm in London, does not have a very optimistic view of the situation. According to Tunkel, Showpiece’s fractional ownership idea could backfire on them. Under certain circumstances, a court could certainly find that the project is less selling a product and more of an investment fund.
Britain’s Financial Conduct Authority has not authorized Showpiece to create or run an investment fund, meaning it is not currently regulated as such. Based on Showpiece’s terms of service, buying fractional ownership of Valentine’s Day Mascara sounds like you’re buying stock in a company. Much in the same way that shareholders vote on certain decisions made by a publicly listed company, Showpiece stipulates that should someone want to buy the mural, everyone with fractional ownership would vote on whether or not to sell, with 60% required to do so. Showpiece also manages an online secondary marketplace where people can buy and sell their pieces of the mural. Another lawyer specializing in art law, Pierre Valentin, has said that the fractional ownership venture might not seem like an investment because of the current lack of market for people to buy and sell their pieces of the Banksy. However, he nonetheless said that there will likely be such a market in the future, where the objective is to profit from buying and selling such fractional ownership the same way people buy and sell stock in Apple or Google or Berkshire Hathaway.
However, the main way Showpiece’s fractional ownership scheme could be considered an illegal investment fund is if the business’s operations are brought before a court through a lawsuit. While it’s a little too early to say, there might be a chance that a lawsuit could arise from this situation. Namely, Showpiece sold each piece of the Banksy mural for £120 based on Valentine’s Day Mascara being worth £6 million. However, those who have already bought shares in the work could accuse Showpiece of using an inflated total price not representative of the work’s actual value. The mural has a £6 million valuation for insurance purposes, but Red8 Gallery originally appraised the Banksy at £1 million to £1.5 million. Furthermore, a multi-million-pound price tag would only be appropriate if Valentine’s Day Mascara received official authentication from Banksy‘s studio, Pest Control. The mural has no such authentication, even though Showpiece points to posts on Banksy’s social media sites to indicate that they did indeed create the work in Margate. Street art is incredibly difficult to authenticate and, therefore, value. Banksy works have been sold at auction before, but these have almost always been works on paper or canvas that include documents from pest control attesting to their authenticity. Any specialist at an auction house will tell you that without any documentation confirming a work is by who is said to be by, an evaluation may as well be meaningless. This is where a possible lawsuit would stem from, most likely.
If the Financial Conduct Authority somehow finds Showpiece to be operating an illegal investment fund, all those who have paid for a piece of a Banksy would have their money returned to them.