JSE, Cumax befuddled
US-based music firm threatens legal action against Jamaican entities
STAKEHOLDERS HAVE expressed confusion over US-based Music Licensing Inc’s threat of l egal action against the Jamaica Stock Exchange (JSE), Cumax Wealth Management Ltd which acted as its broker, along with attorneys and businessmen associated with the stalled cross-listing.
“The company plans to file a lawsuit in a federal court within the United States,” according to the latest filing to the US Securities and Exchange Commission (SEC).
The company, however, gave no timeline.
Music Licensing holds some US$7,300 cash on its books, but its capital stands at some US$40 million based mainly on the value of its music catalogue, according to Simply Wall Street. Music Licensing’s stock dropped 28.6 per cent yesterday.
The filing lists a series of allegations surrounding t he process that the Wednesday Business was unable to substantiate. It is understood that Music Licensing wanted to get its shares cross-listed in Jamaica in 2023.
The parties that Music Licensing plans to take legal action against are the JSE and its managing director, Marlene Street Forrest; Cumax, its CEO Ian McNaughton and Chief Investment Officer Maurice Wright; businessman Earl Chapman, and attorneys Shaunna-Kay Carter and Novia Cotterell.
“As a result of these actions, the company states that the listing in Jamaica has not moved forward. The company intends to hold the mentioned parties liable for any and all damages incurred,” stated the company in its latest filing.
The company added that it does not believe that the lawsuit will be material to its operations.
“Additionally, the company does not consider the non-listing on the Jamaica Stock Exchange to be materially affecting the company,” added the filing.
Music Licensing’s shares trade under the ticker symbol SONG on the over-the-counter market in the United States. The company is a relatively small music rights firm with a big catalogue.
The company wanted to crosslist as a means of entering the local publishing space by leveraging its
listed capital to raise debt to f und acquisitions. The company chose Cumax as its lead broker and arranger.
Under the previously disclosed agreement, Cumax would have provided advisory services to the company for a period of nine months, with an option to extend the agreement by mutual consent.
“We are having our lawyers advise us. This makes no sense,” said Cumax’s Managing Director Ian McNaughton in response to queries. “There was no acrimony. We have been doing our job.”
McNaughton said that files were sent to the Financial Services Commission (FSC) for review in November as a necessary step to gaining approvals for JSE listing. McNaughton said that Cumax played its part and awaits the FSC’s response.
The JSE also expressed confusion at the filing.
“I do not understand the allegations, because the only thing the JSE does is provide information for persons who want to access the market. That is all,” said JSE Managing Director Marlene Street Forrest in response to Wednesday Business queries.
Wednesday Business awaits responses from the FSC, and the attorneys named in the suit.
Music Licensing, led by CEO Jake Noch, is one of a handful of music rights bodies that earn royalties for musical artistes.
Rights entities earn royalties by charging fees to radio stations and online sites. In turn, they pay over these royalties to artistes after earning a small fee. Some other notable royalty groups are ASCAP, BMI and SESAC.
Music Licensing Inc represents works from artistes such as A$AP Rocky, Wiz Khalifa, Pharrell, Young Jeezy, Juelz Santana, Lil Yachty, MoneyBaggYo, Larry June, Soulja Boy, Lex Luger, Lud Foe, Young Scooter, Nipsey Hussle, Famous Dex, and Fall Out Boy. The company adds that it also represents the rights of music created by artificial intelligence.
Noch also heads the affiliated ProMusicRights, which holds a l arge intellectual property, or IP, catalogue. ProMusicRights manages some 2.5 million musical IPs in the company’s catalogue.