Shares in the auction house Sotheby's have plummeted, following allegations of price fixing and the resignation of two top managers.

Authorities in the United States, the UK and Australia are investigating whether the 256-year-old auctioneer and its main rival, Christie's International, fixed sale commissions.

A raft of class-action law suits has followed, where customers of both firms jointly sue in court to get back some of the money they paid in commissions.

Christie's - the world's number one in the auction market - has agreed to co-operate fully with the US Department of Justice, and in exchange has been granted a "conditional amnesty".

On Tuesday, Christie's said it had discovered new information relevant to the investigation, and handed it over to the US government.

The focus of the authorities is now very much on Sotheby's. The company confirmed that it recently met with Department of Justice officials to discuss "a prompt and appropriate resolution of this investigation".

Even though none of the firms has been found guilty yet, Sotheby's has acknowledged that the dispute "could well have a material impact on Sotheby's financial condition".

The firm's top two managers, Chairman Alfred Taubman and chief executive Diana Brooks, have resigned, without giving reasons for their departure.

The situation has been complicated by the fact that Mr Taubman owns 22% of the company's stock, but controls 63% of voting rights.

Charles Campbell, an analyst of NewYork's Miller Tabak & Co said it appeared that "recent changes in senior management are in some way related to investigations over possible co-ordination of auction prices".

Share trouble

All this has made a big impact on Sotheby's share price, which had rallied during much of 1999 following the announcement of the firm's internet strategy, which saw it link up with online retailing giant Amazon.

After languishing at about £10 per share in October 1998, Sotheby's stock rocketed to just over £26 in May 1999.

Now shares are down to about £12 again.

Another worry for the company is the critical stance of two top rating agencies, Moody's and Standard & Poor.

Their evaluations can make a big impact on Sotheby's ability to raise money on the financial markets. Moody's has now changed its "outlook" on Sotheby's rating "to negative from stable", while Standard & Poor placed the company on a credit watch with negative implications.

Sotheby's is the world's number 2 auction house behind Christie's. The firm holds about 700 auctions ever year, dealing in fine arts, antiques, and collectibles.

Best known for selling famous paintings for record prices, four fifths of revenues are generated by items sold for less than $5,000.