Jay-Z Is Ordered to Testify in Case Involving His Former Fashion Brand
Posted May 8, 2018 11:27 p.m. EDT
NEW YORK — A federal judge on Tuesday ordered rapper and entrepreneur Jay-Z to testify as part of a securities investigation into a company that paid him more than $200 million in 2007 for assets including some related to the Rocawear brand.
During months of back and forth in response to subpoenas, lawyers for Jay-Z sought to limit his testimony in the case. They said that he had been on tour when his testimony was first requested and that he was now preparing for another.
Last week, the Securities and Exchange Commission filed court papers asking that a judge order Jay-Z, whose actual name is Shawn Carter, to comply with a subpoena to testify. In their most recent response, the lawyers sought to limit any testimony to a single day. But the SEC resisted limits, and the judge sided with its lawyers.
“I’m granting the SEC’s application to enforce the subpoena,” Judge Paul G. Gardephe of U.S. District Court in Manhattan, said in court Tuesday. “The testimony has been delayed for five months, and I do not intend to tolerate any further delay.”
The SEC is investigating whether federal securities laws were violated in connection with Iconix Brand Group Inc.'s “reporting of intangible assets, including the Rocawear assets.” Iconix wrote down the Rocawear brand by about $169 million for the year ending 2015 and by about $34 million for the year ending in 2017.
The government wrote that after the sale, Iconix reported that Carter remained involved with the Rocawear brand and that he and Iconix maintained certain business partnerships. The SEC said that it wanted to question him about, among other things, the value of the Rocawear trademark; his involvement with the brand after the sale; and “multiple emails, meetings and phone calls related to Iconix.”
After briefly conferring Tuesday, lawyers told Gardephe that Carter would testify on May 15, an agreement that would appear to resolve a standoff over the scope of the subpoena and how much time Carter should make available.
In court papers, the SEC had said that an examination of Carter would “take at least a full day of testimony.” The SEC said that it sent subpoenas to Carter in November and February but that in emails and phone calls his lawyers said he would not comply unless the testimony was limited to four hours. Carter eventually agreed to a full day, and his lawyers wrote that the SEC had “no legal warrant to insist upon more.”
In court papers, Carters’ lawyers said the SEC’s request should be denied because the government had not shown that his testimony was relevant and because compliance would impose an unreasonable hardship. The SEC, they added, had rejected their offers to provide information through a lawyer or telephone interview.
They called the SEC request “unreasonably and unnecessarily burdensome” and said it was “driven more by governmental fascination with celebrity and headlines than by any proper investigative purpose.”
Gardephe suggested that it was not up to Carter’s lawyers to determine what information the SEC should pursue, and he declined to institute time restrictions for his testimony.
“Limits sometimes incentivize respondents to waste time,” he said, adding that they might then want to “in effect, run out the clock.”