The Securities and Exchange Commission, on May 3, filed a subpoena enforcement action against Shawn Carter, better known as rapper Jay-Z. It seeks an order directing him to comply with an investigative subpoena for his testimony.
According to the application and supporting papers, filed in federal court in the Southern District of New York, the SEC is investigating potential violations of federal securities laws related to the financial reporting of New York-based Iconix Brand Group, a brand management company and owner of a portfolio of brands that includes Ecko, Candie’s, Danskin, Joe Boxer, Ed Hardy, Pony, and Starter.
Iconix paid Carter more than $200 million to acquire “intangible assets” associated with his Rocawear apparel brand. After the acquisition, Carter and Iconix maintained publicly disclosed partnerships related to the Rocawear brand.
In March 2016, Iconix publicly announced a $169 million write down of Rocawear and, in March of this year, Iconix announced a further writedown of $34 million.
The SEC’s application states that the Commission seeks Carter’s testimony to inquire about, among other things, Carter’s joint venture with Iconix.
The SEC initially issued a subpoena for Carter’s testimony on Nov. 16, 2017. On Feb. 23, 2018, after Carter retained new counsel, the Commission issued a second subpoena for his testimony. Carter failed to appear as required by the subpoenas and, through his counsel, declined to provide any additional dates on which he will agree to appear for investigative testimony, according to the SEC.
As stated in the SEC’s application, a subpoena enforcement action is appropriate where the information sought from the witness is relevant to the investigation. The application does not reflect a determination by the SEC or its staff that Carter has violated provisions of the federal securities laws at issue in the investigation.