Several years ago I was asked to write a short article for Billboard about what artists should look
for in business managers. I came up with
really dull observations like making sure that the business manager is
experienced in state and local taxation and making sure the artist understands
the fee arrangement. If I had had any
foresight, I would have probably
added: make sure your business manager
does not rob you blind.
Alanis
Morrissette just sued her former business manager Jonathan Schwartz and his
(now former) firm GSO Business Management, LLC claiming that Schwartz converted
nearly causes of action in the lawsuit
include
breach of fiduciary duty, fraud, conversion and negligence.
The
allegations against Schwartz are pretty sordid but to me the real disturbing
factor here is the allegation of negligence against the firm, GSO. It may be shocking to think that a major
business management firm with some of the most respected professionals in the
industry would not have the checks and balances in place to monitor this kind
of activity, especially over a four year period.
It's
shocking but not surprising. There are
constant examples of this kind of financial fraud not being discovered by the
principals of their firms until it is too late.
I have witnessed this firsthand on more than one occasion. It is not always out and out fraud. Sometimes it
might be a case of employee negligence not being uncovered. There are always going to be bad actors but
it seems that these firms must do a better job of monitoring their client’s
accounts and anybody who places their
financial well being in the hands of a
fiduciary third party should pay close attention to the activity in their
account. This is something that artists
(and the rest of us) probably fail to do as often as we should.
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