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.
JAY-Z may be forced to testify in a federal case even though the music mogul seems to be doing his best to stay silent.
Rapper Jay-Z stands on the sidelines as the New York Jets play against the Dallas Cowboys during their NFL Season Opening Game at MetLife Stadium on September 11, 2011 in East Rutherford, New Jersey.
The SEC said its quest to put Jay-Z on the stand "does not reflect a determination" that the rapper "has violated provisions of the federal securities laws at issue in the investigation".
The SEC initially issued a subpoena for Carter's testimony on November 16, 2017. The agency is seeking Carter's testimony after Iconix wrote down the value of Rocawear by $169 million in March 2016 and another $34 million this year, the SEC said. It also said that it wants to learn about his other businesses that did business with Iconix along with also his awareness of the wisdom and objective of individuals who realized of trades involving his organizations Jay-Z along with Iconix.
Iconix, which sells retail brands Candie's and Joe Boxer, has been under SEC investigation over its accounting practices since December 2015.
Carter received more than $200 million from Iconix in 2007 in a deal to acquire his Rocawear fashion brand.
So Jay-Z Has Ignored Two Subpoenas Before - How Is That A Thing?
A representative from Iconix did not immediately respond to CNBC's request for comment. According to the SEC, his lawyers did not provide any dates when he would be available to testify.
Iconix shares were down 6.7 percent at 59 cents in early afternoon trades Thursday.