Auction house Christie's has denied a report that it covered up the Nazi past of a painting it offered for sale.
The Nazi regime stole many pieces of art between 1933 and 1945
The Guardian newspaper said Christie's failed to alert the authorities or the heirs to the painting by Jacob Duck after discovering it had been looted.
But the auctioneers said they adhered to international law and did no wrong.
The painting, The Merry Company With a Woman Playing A Lute, by the Dutch master, was auctioned in Germany in 1937 after its Jewish owners fled.
It was offered for sale by a private German collector in July 2000.
But Christie's said its own research discovered that the painting had a controversial past and its sale was averted.
A Christie's spokeswoman told BBC News Online they were only obliged to tell the vendor and could not tell the heirs of the original owners or any outside authorities.
"We do not have the legal right to breach our duty of confidentiality by contacting third parties without the vendor's permission, nor did we have the right to withhold the painting from the vendor," she said.
"For this reason, we did the next best thing and encouraged
the vendor to contact the Art Loss Register who would help him to locate and contact the heirs. We also offered to assist him in this."
Under law, art that can be proven stolen cannot be sold unless authorised by its rightful owners, or their heirs.
The painting had been owned by a Jewish couple from Berlin, Ulla and Moritz Rosenthal, who fled from Germany in 1937. It was sold in an auction of some 800 items from their apartment.
The Rosenthals, who emigrated to Holland, were later arrested by the Gestapo and died in the Auschwitz concentration camp in 1944.
The vendor, Carl Schunemann, said he bought the painting legally from a Jewish gallery in Amsterdam in 1984.
The family of the original owners had been contacted and were reported to be considering legal action against the auction house for putting the painting on sale.
The Christie's spokeswoman said the auction house took allegations of paintings being "unrestituted" - or looted - very seriously.
"We have never been contacted by any Rosenthal heirs. If they do contact us, we will be happy to try to put them in contact with the vendor.
"We will also, as we have on many occasions in the past, provide support to both parties in trying to resolve this issue."
She said the auction house employed four researchers who were responsible for checking whether artwork had been looted or stolen between 1933 and 1945, the years of the Nazi regime.