2018 Articles

“Anything Goes”: Regulating the Conduct of Money-Bundling Broadway Co-Producers

Manella, David

This Note will analyze industry concerns relating to the practice of granting above-the-title producer credit to individuals solely for contributing or bundling a share of a production’s capitalization, specifically by asking whether money-bundling Broadway co-producers are acting as unregistered broker-dealers in violation of applicable Security Exchange Commission (“SEC”) registration requirements. In Section I of this Note, I provide a history of Broadway producing models, so as to understand how today’s dominant model developed. In Section II, I unpack that model by describing the structure of theatrical investment vehicles and identifying the different types of Broadway producers. In Sections III and IV, I outline the applicable provisions of the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”), and in Section V, I apply the SEC’s four-factor “broker-dealer” test to the conduct of money-bundling Broadway co-producers, thereby isolating industry practices that might trigger registration requirements. Finally, in Sections VI through VII, I identify the potential consequences of using unregistered brokers and develop a list of recommendations that production companies can follow to avoid violating SEC registration requirements.