It’s changing into more and more clear that the MLC has little to no oversight. The Copyright Workplace is tasked by Congress with oversight authority over this quasi-governmental group. Nothing. The Copyright Workplace haven’t even concluded their mandated five-year evaluation of the MLC that began a 12 months in the past. Not solely has nobody responded to Congressman Fitzgerald’s inquiries concerning the MLC’s oddball funds, the Copyright Workplace hasn’t responded to the numerous public feedback demanding solutions on the MLC’s sketchy funds as demonstrated on their tax returns.
The MLC’s 2023 tax return exhibits the quango is holding $1,212,282,220 invested in publicly traded securities which is a fortune for a company that makes no cash and has no earnings.
The Complement to the MLC’s 2023 tax return contains this language:
In our Kind 990 for 2023, we offered info concerning funds we had been holding in banks and
investments as of the start of 2023 and the top of 2023. These included evaluation funds that we
subsequently use to fund our operations; royalty funds we weren’t but capable of distribute and on which we’re required to earn curiosity in accordance with the Music Modernization Act (MMA) of 2018; and royalty funds we had been holding pending distribution.
What the MMA really says within the black field penalty language of 17 USC §115 (d)(3)(H)(ii) is:
Curiosity-bearing account.—Accrued royalties for unmatched works (and shares thereof) shall be maintained by the mechanical licensing collective in an interest-bearing account that earns month-to-month curiosity—
(I) on the Federal, short-term charge; and
(II) that accrues for the advantage of copyright homeowners entitled to fee of such accrued royalties.
The black field penalty in 17 USC §115 (d)(3)(H)(ii) is just like the late payment charged to licensees. The code creates an incentive for the MLC to pay out unmatched funds rapidly to keep away from the market share distribution of black field which may occur any minute now (notably because the Copyright Workplace hasn’t accomplished the five-year evaluation it began over a 12 months in the past).
This language of 17 USC §115 (d)(3)(H)(ii) doesn’t “require” the MLC to “earn curiosity”, it requires them to PAY curiosity. As a result of it’s inextricably tied to job efficiency, it could not be a fee borne by the licensees as a part of the executive evaluation as a part of the “collective complete prices.”
That’s why it’s a penalty. It’s, in my opinion, completely false and deceptive to state in a matter underneath the jurisdiction of the federal authorities that the MLC is in compliance with a code part that doesn’t say what they are saying it says. And it’s not simply this one time, the CEO has stated virtually these actual phrases in testimony to the Home IP Subcommittee and that in supplemental written testimony to reply questions for the document from the Subcommittee.
Even if you wish to be beneficiant and settle for the MLC’s argument–and it’s simply an argument–that the MMA “requires” the MLC to “earn” curiosity, an “curiosity bearing account” merely doesn’t ponder “investing” different individuals’s cash–your cash–in publicly traded securities by a inventory dealer. When requested direct questions on who bears the draw back and who will get the ups on their inventory buying and selling, the MLC has by no means answered the query.
The closest to a solution we get from the plain statutory language is that the MLC is required to pay curiosity on unmatched funds on the “federal brief time period charge” which is roughly 4.23%. Does that imply that if the MLC makes extra than a 4.23% return they hold the upside? Or if the inventory brokers don’t obtain that return, does that imply the licensees cough up the distinction in further administrative evaluation contributions? Unlikely, so would the MLC’s board members go the hat? I’ll imagine that after I see it.
Whereas the MLC refuses to reply who participates in the advantages or draw back of the funding coverage, the quantity invested in publicly traded securities over 12 months has radically elevated from $804,555,579 in the beginning of 2023. As of the top of 2023, the MLC’s holdings in publicly traded securities alone elevated to $1,212,282,220, roughly a 50% acquire over 12 months. What we don’t know is that if that acquire is because of slick inventory buying and selling, monkey with a dartboard or the addition of latest cash, Madoff-style.
The MLC gives this clarification:
Firstly of 2023, we had been holding $138.8 million in “Financial savings and momentary money investments.”
By the top of 2023, we had moved $131.1 million of those funds to “Investments – publicly traded securities,” leaving the remaining $7.7 million in “Financial savings and momentary money investments.” On the
starting of 2023, we had been holding $804.6 million in “Investments – publicly traded securities.” By the
finish of 2023, the quantity of funds we had been holding on this class elevated to $1.2 billion. This year-
finish quantity included the $131.1 million we had moved from “Financial savings and momentary money investments”
into this class throughout the 12 months.
Notice that this language explains nothing. Not solely do they spherical down by $12,282,220, they merely describe actions of money.
So as soon as once more, we’re offered with a doc that avoids the important thing concern at greatest and is deceptive at worst. However what is evident is that the MLC has extra in holdings that roughly 130 regional banks which have substantial disclosure obligations. It’s wanting extra like a hedge fund.
Cui bono?
