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Jay-Z must face questions in SEC probe, judge rules

The hip-hop mogul had argued that he was too busy with an upcoming concert tour and running his business empire to answer questions.

Jay-Z has ignored subpoenas, according to a judge.

Jay-Z has ignored subpoenas, according to a judge. Photo Credit: Getty Images for Roc Nation / Ari Perilstein

An impatient Manhattan federal judge on Tuesday said it was time for hip-hop mogul Jay-Z to stop dodging SEC subpoenas and show up for questioning in a securities probe of Iconix Brand Group and its purchase of his Rocawear clothing line.

“The testimony has been delayed for five months, and I do not intend to tolerate any further delays,” U.S. District Judge Paul Gardephe told a lawyer for the rap icon at a hearing over his refusal to show up for the latest of three subpoenas from the agency.

The SEC investigation is focused on Iconix, which encountered mounting financial problems after buying Rocawear assets for $200 million, and wrote down the business by $169 million in 2016 and another $34 million in March.

The agency has not accused Jay-Z, whose real name is Shawn Carter, of violating securities laws. But he ignored subpoenas in November and again in March, Gardephe said, when the SEC refused to negotiate time limits on his questioning to two hours or four hours or one day.

The latest subpoena called for Carter to appear on Friday. He complained that he was too busy with an upcoming concert tour and running his business empire. His lawyers argued the SEC could get the information they wanted elsewhere, and insisted on a one-day limit.

At Tuesday’s hearing, which Carter did not attend in person, Gardephe didn’t even bother to hear arguments from lawyer Alex Spiro. He recounted the history of Iconix’s financial problems and the SEC’s efforts to talk to Carter, and ordered him to appear on May 15.

The judge said he thought questioning would only take a day, but refused to impose a time limit in advance.

“I’m not going to set a time limit because time limits sometimes incentivize witnesses to waste time to run out the clock,” said the judge, who promised to be available by phone if there was a dispute about extending it beyond a day.

The questioning, the judge said, would cover the value of Rocawear’s trademark, Carter’s involvement and transactions through affiliate businesses with Iconix after the sale, and emails and phone calls the SEC wanted to discuss. He rejected efforts by Spiro to narrow the questions.

“It’s not his job to determine what information the SEC needs to do its job,” the judge said.

After the hearing, Spiro said he and Carter were “pleased” with the decision, and declined to comment further.

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