The Committee For A More Responsible Local 47

1. Navigating CARES Act Unemployment Assistance
2. PHILADELPHIA INQUIRER REPORTS
3. MPS CHALLENGES THE TRUSTEES
4. GLENDALE NOON CONCERT STREAM THIS WEDNESDAY

…Absolutely guaranteed anonymity – Former Musician’s Union officer


…The one voice of reason in a sea of insanity – Nashville ‘first call’
scoring musician

…Allows us to speak our minds without fear of reprisal – L.A. Symphonic musician

…Reporting issues the Musicians Union doesn’t dare to mention – National touring musician

==============================================

1. Navigating CARES Act Unemployment Assistance

As you know, the entertainment industry is experiencing an unprecedented increase in unemployment as a result of the COVID-19 pandemic. Fortunately, the CARES Act passed by congress last week will provide $260 billion in enhanced and expanded unemployment insurance (UI) to thousands of entertainment workers throughout the country who are being furloughed, laid off, or finding themselves without work through no fault of their own.

There are a number of resources (listed below) that can help you navigate UI or the benefits provided by the CARES Act, but the first and foremost should be your state’s unemployment office website, as most of the COVID-19 economic relief funding will be distributed through state UI programs. 

Links to each state’s unemployment office website(s)

National Employment Law Project fact sheet on who qualifies for CARES Act aid

Helpful graphic provided by the AFL-CIO’s Department for Professional Employees on navigating COVID-19 UI

Please keep in mind that as the unemployment rate continues to increase, many state unemployment offices may be overwhelmed by the influx in applications. This makes it even more crucial that individuals start the process as early as possible and be persistent even if phone lines and online forms are malfunctioning. 

In solidarity, 

IATSE Communications

FROM MUSICIANS FOR PENSION SECURITY

==========================================

II. Philadelphia Inquirer Reports

Philadelphia Inquirer Reports on AFM-EPF Class Action Settlement While Trustees’ Risky Bets Continue to This Day   First and foremost, we at MPS hope that all of our subscribers and their loved ones are staying safe and healthy during this time of crisis. This is a difficult time to be thinking of anything other than the health and well being of our friends and family, but there continues to be news surrounding the Pension Fund and MPS will not waiver in our commitment to keep Plan Participants informed. Here’s the latest: As many of you know, Local 802 members Paul Livant and Andrew Snitzer filed a class action lawsuit against the AFM-EPF trustees in 2017. That lawsuit is in the process of being settled on financial terms MPS predicted shortly after the lawsuit was filed. For those interested in more details on the class action settlement right now, click here to see a feature article in today’s Philadelphia Inquirer. The proposed settlement also contains some interesting governance reforms, which we will be writing about in an upcoming post. Trustees’ Risky Bets Continue to This Day  In the meantime, we thought we would call to your attention certain disclosures that are made in the court documents filed in support of the settlement. Those court documents can be accessed here and here.   Plaintiff attorneys reviewed over 64,000 documents, took 24 depositions and hired multiple experts to assist them in the case.   Our main takeaway from the court papers is not that the trustees were reckless in their investment decisions. We already knew that, and the Federal Judge supervising the case has said so on multiple occasions.   The real news is that the overly risky investment strategy persists to this day and remains out of pattern with the way comparable multiemployer plans are run. (See our previous article here.)   Here are the critical conclusions in the court papers:   Currently, AFM-EPF’s investment allocations are way out of pattern with other multiemployer pension plans with assets over $1 billion. AFM-EPF continues to bet heavily on foreign stocks (16% of the portfolio compared to the average of 4.4% for other plans) and also has a heavy bet of 8.1% to emerging market stocks compared to the average of 6.3%. AFM-EPF also is currently betting heavily on private equity (22.9% of the portfolio compared to the median of other plans of 8.7%) and an allocation of 16.6% to hedge funds compared to the median of other plans of 5.9%. The trustees’ own full analysis of their current investment allocations, compared to the allocations of other multiemployer plans, can be found here. The trustees have no intention to alter these allocations. Their long-term target allocations are essentially the same as today’s allocation.    That’s alarming.   Here are some other disclosures we found in the court documents:   Beginning 2010, the trustees made a series of increasingly risky asset allocation investment bets, including outsized bets on Emerging Markets Equities (EMEs) and Private Equity while reducing its investment in domestic equities below 20%.   Given the bull market in U.S. stocks beginning in 2010, the reduction of the Plan’s U.S. equities investment resulted in huge opportunity losses for the Plan.   These asset allocations were way out of pattern with other large multiemployer plans.   By December 2011, Plan actuary Milliman was projecting that the Plan would likely not emerge from the red zone.  At their depositions, the primary reason the trustees gave for doubling and tripling down on their increasingly risky asset allocation bets was to attempt to “shoot for the fences” in the hope that outsized investment returns would improve the projections.    It’s one thing to make mistakes in the past. It’s another to keep making them. The trustees’ overly risky asset allocation persists to this day and their refusal to change only provides further evidence that they are not up to the task of governing a large pension fund. ======================================   III. MPS Challenges the Trustees

MPS Challenges the Trustees to Release Court Evidence   We understand the trustees’ distress about the mounting evidence of their continuing recklessness in their handling of the Plan’s investments. Perhaps that is why in their recent post about the class action settlement the trustees have thrown more heat than light on the subject matter at hand. We offer a simple suggestion: unseal the court record so we can all see the evidence for ourselves.   It’s easy to selectively quote from the court record when that record has been sealed.   Even without access to all the evidence in the case, the evidence that has emerged is disturbing to say the least: In their own sworn testimony, the trustees’ investment strategy was to “shoot for the fences.” The Federal Judge supervising the case, Valerie Caproni, called the trustees’ investment strategy “an exceedingly risky strategy” and stated that they invested in “very risky illiquid investments which just doesn’t seem like what a pension fund should be invested in.” The exceedingly risky investment strategy persists to this day even though it is completely out of alignment with other large multiemployer pension funds. (The trustees’ attempt to obfuscate this plain fact – shown in their own analysis – notwithstanding.)   In the case, the trustees hired expert witnesses to bolster their defense. In their recent post, the trustees quote these experts’ conclusion that the trustees did a great job. If indeed these experts said that, let’s see those reports. But let’s also see the expert reports of the plaintiff experts who said the trustees did a terrible job. And let’s see the depositions of those experts so we can see how they held up under cross-examination.   The trustees say their investment returns over the past decade were excellent. But the plaintiff experts say the trustees’ reckless decisions caused the Plan grave financial harm. Again, let’s see the reports and we can all judge for ourselves.   What better way to get to the truth than to release these documents?   Otherwise, we will have to bear the trustees issuing self-serving, selectively quoted and at best half true statements all saying the same depressing thing: We did nothing wrong; anyone who criticizes us has impure motives; and we will never change.

Please share on social media or forward to your colleagues.     www.musiciansforpensionsecurity.com

==========================================I

IV. GLENDALE NOON CONCERT

GLENDALE NOON CONCERT STREAMING THIS WEDNESDAY

During the Covid-19 “Safer at Home” period in Los Angeles County,

Glendale Noon Concerts will bring our programs to you

via streaming on Facebook Live and Youtube:

The APRIL 1, 2020 program can be viewed at this link

beginning at 12:10 pm PST: 

Violist-Composer Jonah Sirota & Oboist Regina Brady will perform

 Benjamin Britten, J.S. Bach, and Jonah Sirota (a premiere!)

http://glendalenoonconcerts.blogspot.com/2020/03/on-facebook-live-stream-glendale-noon.html

The concert will also be available for viewing at Jonah Sirota’s Youtube Channel:

https://www.youtube.com/channel/UCyiKPxIQ8EaZHBQd2pDC_jA/

RELAX DURING YOUR LUNCH HOUR WITH LIVE MUSIC

Facebook LIVE stream: GLENDALE NOON CONCERTS

Every FIRST & THIRD WEDNESDAY at 12:10-12:40 pm

Presented by Glendale City Church

=======================================

Until Next Time, be safe

The COMMITTEE

…Absolutely guaranteed anonymity – Former Musician’s Union officer


…The one voice of reason in a sea of insanity – Nashville ‘first call’
scoring musician

…Allows us to speak our minds without fear of reprisal – L.A. Symphonic musician

…Reporting issues the Musicians Union doesn’t dare to mention – National touring musician


====================================

I. 26.85 Million Settlement Against AFM for Gross Trustee Mistakes

[Similar to Trump, and as expected, trustees did not acknowledge they did anything wrong.]

The musicians pension lost big time on risky bets; then a Cheltenham-born saxophonist led a suit that won a $27 million settlement

Who pays when the people who oversee retirement plans bet on risky investments and end up losing big time?

Thursday’s settlement deal in a case brought by a onetime Philadelphia area saxophonist against a $2 billion musicians’ pension fund shows that the trustees who ratify advisers’ and outside managers’ investment picks can be held responsible for their mistakes.

Management and labor trustees who oversaw the American Federation of Musicians and Employers’ Pension Plan for 50,000 working and retired entertainers will have to pay the fund $26.85 million — minus up to $10 million in legal costs– to settle a civil complaint that they gambled tens of millions away on poorly performing private equity and foreign investments. They did all that while avoiding U.S. stocks even as their value soared in the early and middle 2010s.

That’s according to the agreement between lawyers for trustees for the joint plan, co-managed by the American Federation of Musicians labor union, a group of employers including Time-Warner, Disney and Broadway theater owners, and the musicians who brought the suit, including Andy Snitzer, a Cheltenham High graduate known for his work with Paul Simon, Sting, and the Rolling Stones.

Pending approval from a federal judge in New York, the money will be paid by trustees’ board insurance — which, though adequate in this case, is rarely called on to cover claims this expensive, said the musicians’ lawyers Steven A. Schwartz and Robert J. Kriner Jr. of Haverford-based Chimicles Schwartz Kriner & Donaldson-Smith.

Lawyers for the industry trustees, at the big New York corporate law defense firm Proskauer Rose, confirmed the settlement, which avoids “a needless and disruptive court battle” but does not result in trustees acknowledging they did anything wrong, according to a statement by James Chase, for the trustees.

“We have always taken our fiduciary responsibility seriously and acted prudently in the best interests of all Plan participants,” he added, speaking for the trustees. He noted that the trustees took other steps to cope with the funding deficit, including sharp cuts to benefits and early retirements, and boosted employer contributions, which rose from $54 million in 2009 to $76 million last year.

Besides paying cash, Chase noted the plan has agreed to reforms. Those include the appointment of veteran pension lawyer Andrew Irving as Neutral Independent Fiduciary Trustee for the musicians’ plan, which Schwartz said would make it less likely that the trustees will make high-risk investments.

The pension could certainly use additional cash. It had $1.8 billion in assets and $3 billion in liabilities as of early 2019, making it about 60 percent funded. It has only 21,000 working members paying in, compared with 15,000 retirees or survivors who are collecting and 14,000 others who no longer work but are eligible to collect.

What went wrong? The plan “got clobbered” in the stock market collapse of 2008. The trustees realized that, with a high proportion of retirees to paying members and fewer musicians making a living in the digital era, “the pension plan would run out of money” in 30 to 40 years, said Schwartz, the musicians’ lawyer.

What to do? By 2010, the U.S. stock market had fallen by nearly half from its pre-mortgage-crisis high. Plan leaders — including union heads elected by members, as well as employer representatives (the Philadelphia Orchestra was part of the plan before its 2011 bankruptcy) — should have broadcast the fund’s dim future and pushed for more pension contributions or reduced benefits.

But instead of braving those unpopular steps, trustees “made a decision: ‘Let’s gamble our way out of this,’” said Schwartz.

Among other steps, they doubled investments in two categories — “emerging” stock markets in developing economies , and private equity, typically buyouts of troubled U.S. companies. Those bets came to comprise 9 percent of the fund, and reduced investment in U.S. stocks, which were beginning their longest sustained price increase since World War II.

Over the next year, “emerging markets,” instead of rising, fell so sharply that market wags called them “submerging markets.” Many private investments also floundered.

That didn’t scare the board. “They doubled down,” said Schwartz, boosting emerging markets to 11 percent and private equity to 15 percent — totaling more than a quarter of the fund, from less than 5 percent two years earlier. At the same time, they continued to reduce U.S. stocks to around 20 percent at a time when the Philadelphia city pension system and many other large plans were closer to 40 percent.

U.S. stocks continued to beat the private and foreign investments that the trustees favored. No matter: In 2015 the board approved boosting emerging markets yet again, to 15% of the fund, and private equity to 18 percent — totaling one-third of plan assets.

Many of those investments proved a drag on plan returns. They reduced profits when other long term investors, including the Montgomery County pension fund, were switching to Vanguard Group-style index funds, which, they noted, tended to do as well as or better than professional stock-pickers, at lower fees.

According to the complaint, the fund didn’t make clear enough to the members that it was in trouble, as required under the federal ERISA law. “It’s easy to play ‘hide the ball’ in reports to pension plan participants,” said lawyer Kriner. The trustees’ lawyers said their clients complied with the law.

Growing worries about the pension plan and the prospect that benefits might have to be cut led to the formation of a dissident union group, Musicians for Pension Security. In 2018, Tino Gagliardi, a pension trustee, and career trumpeter, was defeated in his bid for re-election as president of musicians’ Local 802 in New York. (He remains on the pension board.)

Will the fat legal settlement clear the way for other pension complaints against trustees? “I bet, when you see some of these pension plans tanking and losing value in the future, if you look at their prior disclosures, you’ll see similar problems,” said Kriner.

Still, the musicians’ case has unusual features, said Schwartz. “No other plan took quite this kind of allocation plan,” he said. The trustees had effectively “pulled the goalie,” he said, referring to the hockey move where the losing team replaces its goalie for an attacker in hopes of coming from behind — but risks losing more decisively.

From January 2010 – November 2017 the Plan had average annual returns of about 7.56%, according to the plaintiffs; Vanguard’s Index Balanced Fund returned 9.79% in that period, a significant difference underlining the shortfall from the trustees’ unusual, aggressive approach, said Schwartz.

“The message here is, if you are going to take out-of-the-box risks as a pension plan trustee, you better disclose that you are doing that, and make very sure about understanding, not just the potential upside of the risk, but also the downside.”

===================================================

II. ANOTHER INCOME DRAIN FOR THE AFM

For years, the AFM was charging $50 per musician for foreign orchestras who wanted to tour in the US. Some years ago, those fees were raised to $250 per player. Apparently the AFM has become quite dependent on these fees.

With the Covid-19 Pandemic, that income has vanished and it was reported by a New York member that the AFM might wind up having trouble paying their Time Square rent if it lasts more than a few months.

============================================

III. COMMENTS

I heard this idea floated by a few people and it’s worth repeating here:

With work now disappearing at a rate (I’m in NYC and never seen it so bad) never seen before because of the Corona Virus, we all need to write the Film Musicians Secondary Markets Fund and DEMAND they release our residuals payments NOW rather than wait til July 1st.

please email: Kim Roberts at that office at

[email protected]

and cc your local president esp NY and LA

feel free to share and good luck to all out there

————————————————————–

We are a quartet and sometimes work as a string trio. We cannot pull extra money out of wedding clients to pay for the associated taxes for AB5. We will have to stop working if this law persists.

—————————————————–

Thank you for taking the time to post this Brian! If you haven’t already done so, please consider posting this (in it’s entirety) on all of the AB5 Facebook groups such as California Independent Music Professionals United, Freelancers Against AB5, etc. You are in a unique position to effectively illustrate how many different freelance positions are filled by both union and nonunion INDEPENDENT CONTRACTORS. AB5 will destroy these peoples’ livelihoods.

Thank you for posting!

———————————————————-

It really is all hands on deck to get this earnings killer repealed! It doesn’t matter your political bent if your government is responsible for you not being able to make a legitimate living. AB5 is an equal opportunity destroyer.

Until Next Time, be safe,

THE COMMITTEE