Jay Z Forced To Testify In SEC Stock Fraud Investigation
“I do not intend to tolerate any further delay.”
U.S. District Judge Paul Gardephe ordered the enforcement of the SEC’s subpoena to press Jay-Z in person on the details of his involvement with the Iconix Brand Group as part of the commission’s investigation into possible securities fraud.
Claiming that Jay-Z, whose real name is Shawn Carter, has failed to comply with two subpoenas in the last six months, the SEC asked a federal judge in Manhattan last week for an order to show cause. Jay-Z fired back with an 18-page opposition brief drafted by his attorneys. Observing aloud that Jay-Z had skirted the SEC’s requests for months, Gardephe concluded Tuesday afternoon, “I do not intend to tolerate any further delay.”
The judge said he found that SEC’s investigation was being conducted for legitimate purposes and that the administrative steps had been followed properly. Jay-Z will appear for one day of SEC questioning at an undisclosed location on May 15, with the possibility of a second day if one is not enough.
Gardephe noted that it appears unlikely that the questioning would take more than one day, but shot down any requests for any type of cap, insisting that “time limits sometimes incentivize the respondent to waste time.”
Gardephe issued his order following a dry 20-minute summary of the SEC’s multiple requests for cooperation from Jay-Z and his attorney Alex Spiro from Quinn Emanuel Urquhart & Sullivan LLP. The rapper did not appear Tuesday in the sepia-hued, first-floor courtroom of Manhattan’s Thurgood Marshall Courthouse. Following Gardephe’s order, SEC lawyer Tom Bednar assured the court that the commission would “make every effort to get done in one day.”
The SEC is investigating the New York-based Iconix Brand Group Inc., which bought certain rights associated with Jay-Z’s Rocawear apparel brand for more than $200 million in 2008.
This past March meanwhile, Iconix announced a $34 million write down of Rocawear that compounds a $169 million write down from 2016. A class action suit against Iconix was held before Judge Gardephe in 2015.
In a June 2016 press release announcing DJ Khaled as Rocawear’s newest brand ambassador, Iconix issued a correction regarding previous claims of Jay-Z’s participation in Rocawear, stating, “Iconix Brand Group would like to clarify that Jay Z is no longer a stakeholder in Rocawear, nor does he own shares in Iconix Brand Group. Iconix fully oversees the marketing, licensing and production of the Rocawear brand.”
Along with Rocawear, Iconix owns a diverse portfolio of other fashion brands including London Fog, Ed Hardy, Zoo York, and Madonna’s Material Girl line. Jay-Z’s attorney, Spiro, said he was satisfied with the decision but otherwise did not take questions from reporters as he left the courthouse Tuesday.