Court Orders Hip-Hop Mogul to Respond to SEC Enforcement Action

A Judge in the Southern District of New York an Order to Show Cause against Shawn Carter (a/k/a "Jay-Z") for failing to comply with an SEC subpoena regarding an investigation into his partially owned brand management company.

According to the Application for an Order to Show Cause filed by the SEC, the company Iconix Brand Group ("Iconix") may have violated financial reporting laws by making false or misleading statements regarding the offer or sale of securities. In 2007, Iconix paid Mr. Carter over $200 million to acquire intangible assets associated with his apparel brand, Rocawear Apparel LLC ("Rocawear"). Following the acquisition, Iconix announced a $169 million write-down of Rocawear in March 2016 and a further write-down of $34 million in March 2017.

The subpoena seeks, among other things, to examine Mr. Carter's joint ventures with Iconix. The SEC had previously issued two subpoenas to Mr. Carter, to which he had not responded. According to the Order, Mr. Carter will now be required to appear in Court.

The SEC stated that this action "does not reflect a determination by the SEC or its staff" that Mr. Carter has committed any violations related to this investigation.

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