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The SEC Wants to Question JayZ: He Says That He Is Busy with His Global Concert Tour
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By Marianne Jennings

5/11/2018

 

Grammy-award-winning singer JayZ is also a businessman with significant investments.  Shawn Carter (his birth name) was a founder of  Rocawaer, an apparel company.  In 2007, Iconix Brand Group, Inc. paid $200 million to purchase assets from  Rocawaer. Iconix then wrote down the value of the Rocawaer.  by $169 million in 2016 and by another $34 million in 2018.  In \November 2017, the Securities Exchange Commission (SEC) issued a subpoena to Mr. Carter as part of its investigation into the accounting practices of Iconix. Iconix is now a failed clothing company. Mr. Carter did not respond to the original subpoena, and the SEC issued another subpoena in March 2018.  Mr. Carter also did not respond to that subpoena.  Mr. Carter's lawyer has said that Mr. Carter has agreed to one day of testimony for the SEC, but that the subpoena is "burdensome," because of Mr. carter's schedule and his upcoming 45-date global concert tour.  "Rapper JayZ Pushes Back Against SEC Demands," USA Today, May 8, 2017, p. 1D.

 

Mr. Carter is not accused of any wrongdoing.  However, he has been ordered to appear and explain why he should not be required to respond to the subpoena.  JayZ's lawyer has argued that his client has no knowledge about Iconix's accounting practices,“Mr. Carter had no role in that reporting or Iconix’ s other actions as a public company. Mr. Carter is a private citizen who should not be involved in this matter.”

Rocawaer was launched in 1999 and expanded from a rapper clothing company to an international brand. Iconix paid $200 million for Rocawear's baseball cap design.  Mr. Carter maintains that he has no knowledge.  However, even private citizens are subject to judicial subpoenas, even rap rap stars are subject to subpoenas, and even Grammy winners have to show up offer, under oath, that they have no knowledge of a purchaser's accounting practices.  In relity, the SEC is probably seeking information from Mr. Carter about the value of the baseball cap acquisition as part of its investigation into the write-down of its value. Absent limited causes, such as health and working around work schedules, even super stars are subject to federal subpoenas. 

 

DISCUSSION STARTERS

 

Explain the relationship between Iconix and JayZ.

 

Discuss the rights of those who are subpoenaed.