Jay Z has 99 problems—the SEC just became another one

The US Securities and Exchange Commission has requested that a federal judge force Jay Z to comply with an investigative subpoena for his testimony about the 2007 sale of his fashion line, Rocawear, to Iconix Brand Group.

The hip-hop mogul (aka Shawn Carter) has thus far failed to supply testimony.

In 2007, Iconix bought intangible assets associated with the Rocawear apparel brand for $204 million in cash along with $35 million in contingent payments slated for dispersal in Iconix stock depending on performance milestones. The deal came as part of a 2007 buying spree representing some $505 million in upfront deal value for the brand management company:

The purchase of Rocawear still ranks near the top of the most expensive acquisitions for Iconix since 2007, per the PitchBook Platform. However, it later wrote down virtually the entire value of the asset, per the SEC, a fact that Jay Z has thus far declined to discuss with regulators.

According to the application and supporting papers filed by the SEC in federal court in the Southern District of New York earlier his week, the regulator is investigating potential violations of the federal securities laws related to the financial reporting of Iconix. Following the acquisition, Jay Z and Iconix maintained publicly disclosed partnerships related to the Rocawear brand.

However, in March 2016, Iconix wrote down $169 million in Rocawear assets. Then, this past March, Iconix wrote down another $34 million, bringing total write-downs connected with the purchase of Rocawear to $203 million—just $1 million shy of its sticker price.

The SEC’s application states that it’s seeking Jay Z’s testimony on his joint ventures with Iconix, among other matters. The SEC initially issued a subpoena for Jay Z’s testimony in November. In February, after Jay Z retained new counsel, the SEC issued a second subpoena for his testimony. He failed to appear as required by the subpoenas and, through his counsel, Jay Z has declined to provide any additional dates on which he will agree to appear for investigative testimony.

For Jay Z, it’s important to remember the SEC and its staff has not determined he violated provisions of the federal securities laws.

Meanwhile, Iconix is expected to report earnings Friday. The company’s shares (NASDAQ: ICON) plunged some 8% Thursday, giving it a market cap of roughly $31 million. Iconix’s stock is down a staggering 91% over the past year.