On December 2, 2002, the Court entered the Mandate of the U.S. Court of Appeals denying the appeal.

According to the Company’s FORM 10-K For The Fiscal Year Ended December 31, 2001, Plaintiffs' counsel has filed a notice of appeal addressed solely to the Court's award of attorneys' fees and expenses. The Company is not participating in this appeal. No other appeals have been filed and the time to appeal has expired.

As reported by the Company’s FORM 10-K For The Fiscal Year Ended December 31, 2000, on February 16, 2001, the court approved the settlement of the Shareholder Litigation. Plaintiffs have the right to appeal the court's decision by filing a notice of appeal by March 23, 2001. The plaintiffs have not yet filed a notice of appeal.

Earlier, according to the same SEC filing, on September 24, 2000, the Company agreed to settle, subject to court approval, the shareholder class action litigation (the 'Shareholder Litigation'). The Company entered into the settlement agreement for the aforementioned litigation without any admission of liability. According to the terms of the Shareholder Litigation settlement, the Company agreed to deposit in an escrow account: (a) $30 million in cash within 30 days of the court's approval of notice to potential class members and the court's setting a date for the hearing to consider final approval of the settlement and (b) Sotheby's Class A Common Stock with a value of $40 million or, at the Company's option, $40 million in cash, after a pricing period beginning 30 days after final court approval of the settlement. The Company currently expects to issue stock. The Company's former chairman and a co-defendant in the Shareholder Litigation, holder of approximately 13.2 million shares of the Company's Class B common stock, agreed to fund the $30 million of cash payments due under the terms of the Shareholder Litigation settlement, which amount was funded in December 2000.

On June 16, 2000, the Company and each of the other defendants named in the Complaint moved to dismiss the Complaint on the grounds that the Complaint failed to state a claim and (with respect to certain defendants) failed to plead fraud with sufficient particularity. On July 19, 2000 the Court entered an order certifying a class of plaintiffs consisting of all persons and entities that purchased the Class A common stock of Sotheby's Holdings, Inc. during the period from February 11, 1997 until February 18, 2000, inclusive, and who sustained a loss thereby. On August 30, 2000, the Court issued a decision granting the motions to dismiss in part and denying them in part. Specifically, the Court granted the motions of certain officers of the Company and Sotheby's Inc. and dismissed the Complaint, without prejudice, with respect to these defendants, on the ground that the Complaint fails to plead fraud with sufficient particularity. The Court denied the motions to dismiss of the Company and certain individual defendants.

On May 11, 2000 the United States District Court for the Southern District of New York issued an order consolidating the shareholder class action complaints referred to above, and styling the consolidated shareholders' litigation as: In Re Sotheby's Holdings Inc. Securities Litigation, No. 00 Civ. 1041 (DLC). This order also appointed an interim lead plaintiff (the 'Lead Plaintiff') and interim lead counsel. On May 19, 2000 Lead Plaintiff submitted a consolidated amended complaint, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder (the 'Complaint'). The Complaint named as defendants the Company, its Sotheby's Inc. subsidiary, and certain individual defendants. The Complaint sought to recover damages in unspecified amounts on behalf of Lead Plaintiff and a class of all other purchasers of the Company's Class A common stock during the period February 11, 1997 through February 18, 2000.

The original complaint charges Sotheby's Holdings, Inc. and certain of its officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities Exchange Commission. The lawsuit alleges that defendants issued a series of false and misleading statements during the Class Period concerning the Company's revenues. The complaint alleges that defendants failed to reveal that during the Class Period, Sotheby's revenues were both reliant upon, and unsustainable in the absence of an alleged price fixing arrangement with Christie's International PLC. The complaint also asserts that defendants' false and misleading statements artificially inflated the price of the Company's stock during the Class Period.