All that the Securities and Exchange Commission wants right now is more information from Jay Z.
The SEC on Thursday filed a subpoena enforcement action against Shawn “Jay Z” Carter for an order directing him to comply with an investigative subpoena.
According to the SEC’s application in a federal district court in Manhattan, the government watchdog is probing possible violations of federal securities laws connected with the purchase of Carter’s Rocawear apparel brand by Iconix Brand Group Inc.
The SEC has been probing Iconix’s financial reporting, and in the case of Rocawear, Iconix paid Carter more than $200 million to acquire “intangible assets” associated with the apparel brand. The SEC further said that after the acquisition, both Carter and Iconix “maintained publicly disclosed partnerships related to the Rocawear brand.”
According to the SEC’s application, the subpoena enforcement action is “appropriate” where the “information sought from the witness is relevant to the investigation.” The SEC further emphasized that 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.”
Iconix in March 2016 said it would write down $169 million in connection with Rocawear. In March 2018, there was a further write down of $34 million. The SEC said it is seeking Carter’s testimony to inquire about, “among other things, Carter’s joint ventures with Iconix.”
An initial subpoena was issued to Carter on Nov. 16, 2017. After he obtained new counsel on Feb. 23, the SEC said it issued a second subpoena for his testimony. The agency further said, “Carter has failed to appear as required by the subpoenas and, through his counsel, Carter has declined to provide any additional dates on which he will agree to appear for investigative testimony.”
In a tweet to CNBC, a representative for Jay Z said: “We are aware that the SEC is seeking information on Iconix’s financial reporting. 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.”
Shares of Iconix in December 2015 plunged after the company confirmed that the SEC was conducting a formal probe of its accounting issues. The brand management firm subsequently restated several historical financial statements. At the time the company said it would restate certain financial statements, chairman Peter Cuneo said the SEC process related to “highly technical accounting standards.” The current management team at Iconix is different from the one in place for the time period when the accounting practices that the SEC is investigating allegedly occurred.