Jay-Z has to testify before a federal court for an SEC case. Here’s why.

Jay-Z, the famed rapper, and husband of Beyonce, was recently ordered to testify before a federal court in a case that involves the Securities and Exchange Commission and the litigation of an investigation against a brand management firm.

The “Roc” suite of trademarks–one of Jay-Z’s most notable media empires–was sold to management firm Iconix Brand Group several years ago, paving the way for the rise of Roc Nation.

Roc Nation is a low-key management firm that Jay-Z currently spearheads, featuring clients like Rihanna, Kevin Durant, Meek Mill, and other high-profile celebrities from music and sports.

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On Thursday, May 3rd, federal judge Paul Gardephe in the Southern District of New York ordered the rap mogul to appear before him for a May 8th hearing. The judge issued the order after Jay-Z failed to heed multiple previous subpoenas ordering him to testify in a case against Iconix.

The SEC said that the previous failures to testify by Jay-Z, born Shawn Carter, merited Gardephe’s order. “The Securities and Exchange Commission has filed a subpoena enforcement action against Shawn Carter seeking an order directing him to comply with an investigative subpoena for his testimony,” said the commission in a press release.

“The SEC is investigating potential violations of the federal securities laws related to the financial reporting of New York-based Iconix Brand Group, Inc., which paid Carter more than $200 million to acquire intangible assets associated with Carter’s Rocawear apparel brand. After the acquisition, Carter and Iconix maintained publicly-disclosed partnerships related to the Rocawear brand,” the SEC added.

Upon the acquisition and the associated joint-ventures, the SEC initiated a probe into Iconix’s recent financial filings. Notably, Iconix announced a $169 million write-down on the Rocawear brand in March 2016 and again during the same month this year via a $34 million write down.

In a 2018 filing documenting the write-down, Iconix explained, “given the decline in the demand for streetwear and urban clothing, the company’s licensees have been unable to increase sales of Rocawear products.” This virtually soured the deal years after Iconix purchased the Rocawear brand and Roca suite of intangible assets for $200 million in 2007.

“The SEC initially issued a subpoena for Carter’s testimony on November 16, 2017. On February 23, 2018, after Carter retained new counsel, the SEC issued a second subpoena for Carter’s testimony. Carter 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,” states the above SEC statement.

“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,” said Alex Spiro, his attorney and a partner at legal firm Quinn Emanuel Urquhart & Sullivan.

Iconix (NASDAQ: ICON) was up 25.76% to $0.74 after trading closed on Friday. Analysts expect that the current SEC probe will continue to drag Iconix’s stock price down further. This isn’t the first time Iconix’s stock price is expected to suffer following a major deal. After a soured deal with retailing giant Walmart in October 2017, Iconix’s stock price was slashed by half its value.

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