In November 2023 art market media focused on an original street artwork attributed to Banksy, and particularly on doubts cast over the legality of the work’s fractionalisation scheme, its true authorship and provenance of ownership.
Valentine’s Day Mascara was first seen on the morning of 14 February 2023: a painting on the side wall of an end-of-terrace house at 28 Park Place in Margate depicting a life-size image of a 1950s-style housewife in the act of closing the lid of a chest freezer, trapping inside a man whose trousered lower legs and shoe-clad feet stick out. The freezer was real and had evidently been abandoned by the wall, as had an overturned broken plastic chair. The woman wears a plaid turquoise dress, apron, yellow rubber gloves, and a gleeful smile revealing a missing a front tooth. Her right eye is discoloured and swollen closed. The whole combine obviously commented on domestic violence, and was both site and date-specific. Later that day, Banksy’s recognised Instagram account gave the artwork its title, implying his authorship.
That same day, the house owner contacted City of London-based Red Eight Gallery asking for professional help to deal with the artwork installed on and by the side wall of the house. During the following months, the gallery hired building contractors to work with a fabricator, structural engineer and art conservationist in order to remove the mural and abandoned material that comprised the artwork. This was completed by April 2023 at a cost of £195,000, when the whole installation was relocated to the Dreamland Margate amusement park, where it was contracted to be on public show for at least two years.
Since then, the Gallery has been seeking a buyer for the installation, without success – mainly because the work has not been formally authenticated. Pest Control Office (PCO) is the only official body that can authenticate Banksy’s artwork. PCO determines whether Banksy was responsible for making a particular piece of artwork and issues a Certificate Of Authentication if this is the case. PCO only certifies pieces that were produced for commercial sale, such as limited editions on paper and canvas and, exceptionally, originals. Notably, Banksy’s street works are not certified by PCO ‘because they were not created to be sold. PCO urges people not to buy street art unless it was created for sale.’
‘The lack of authentication means we can’t take it to an auction house,’ a spokesperson for the gallery recently explained. ‘There is a grey secondary market for these pieces, but in the current financial market, those people are just not there’. Valued at £6m, the gallery received offers well below that figure, which led the house-cum-installation owner to invite the general public to buy fractional ownership of shares in the work. Accordingly, 27,000 shares priced at £120 each were offered for sale via the online marketplace Showpiece, in August 2023. The objective is that sales of at least £1m will be achieved, with funds being held by a separate new commercial entity, Banksy VDM.
Acknowledging that fractionalisation carries high business risks, Red Eight Gallery says: ‘We’re in a slightly unusual world; this has never been done before. It could be a complete flop, but might sell out in three weeks.’ Striking an altruistic note, the gallery argues that a successful sale of shares in the work would mean that ’it will remain an attraction for people to visit Margate, so it will contribute to the local economy. In the end, this will become an art installation as opposed to a piece of graffiti that is weathered and destroyed over time.’ In September 2023, the installation was temporarily relocated from Dreamland Margate, during its winter closure, to an unauthorised pop-up exhibition, ‘The Art of Banksy’, running at London’s Regent Street until January 2024.
Selling shares in ownership of artwork as a means of raising capital has been practised for at least a decade or so, a tactic that increased significantly during the global Covid economic downturn years, and which has become more sophisticated with the use of blockchain technology to create digital tokens as proof of share ownership. To date, 2,000 fractional ownership shares in Valentine’s Day Mascara have been bought, raising around £250,000.
Financial investment experts, doubtless mindful of the very recent publication by the UK’s Financial Conduct Authority (FCA) of The Collective Investment Scheme Information Guide, have considered the legality of Mascara’sinvestment scheme: in particular, the question of whether the sellers (Showpiece) are registered with and therefore regulated by the FCA, as would be required if the scheme is in law ‘a collective investment’. As one investment expert says, ‘there is a substantial risk [that this scheme] would be shown to be a collective investment scheme without being [FCA] regulated’, in which case ‘the investors or acquirers of those fractions will be entitled to return of their property’.
A key factor, when deciding whether an asset investment scheme is in fact and in law a collective, focuses on whether investors are excluded from the asset’s management. Responding to such consideration, a Showpiece spokesperson explained that it had secured ‘extensive legal opinion on how to structure the Showpiece digital collectibles proposition prior to launching the platform, and we are confident this is not a collective investment scheme … We differ significantly from fractional investment platforms, in that there is no reference in marketing material to proactive sale of the asset nor any mention of future appreciation.’
Furthermore, Showpiece’s published sale terms profess its intention ‘to hold and protect [Mascara] for the enjoyment of our community of collectors, indefinitely’, that any decision to sell ‘will be subject to a vote of all collectors’ with ‘at least 60% of votes cast in favour.’, but that ‘we cannot guarantee that any sale … would result in sufficient proceeds to generate any profit, return, or reimbursement to any collector.’ When asked for comment on Showpiece’s intention, leading art lawyer Pierre Valentin opined: ‘For the time being, there doesn’t seem to be a market for the resale of these fractions. So it is probably not an investment at this point in time. But it is suggested that, in due course, there will be a market for the fractions on the Showpiece platform. And, once there is a market, are people really going to buy fractions simply for the pleasure of owning a certificate?’
Art lawyers have also raised concerns about Mascara’s lack of official authentication by Banksy’s Pest Control Office – which Showpiece’s online platform does not make clear to potential investors. Development of a market for trading in street artworks purportedly authored by Banksy, after their removal, has always been constrained – not only by authentication problems, but also by moral and ethical concerns about their removal from site-specific locations as Banksy’s gifts to local communities.
© Henry Lydiate 2023