PROVIDENCE – First Southwest Co., a financial-planning company, on Aug. 29 filed an objection to a $25.6 million settlement between the state and two other defendants in the ongoing civil lawsuit related to 38 Studios LLC.
First Southwest, which was the financial adviser to the state for the deal, says the settlement agreed upon by R.I. Commerce Corp., formerly known as the R.I. Economic Development Corp., and defendants Wells Fargo LLC and Barclays Capital Inc. violates the company’s process rights and is unconstitutional. In an objection to the settlement, the financial planner said the state is trying to “strong-arm private parties to pay for its mistakes.”
The ongoing civil suit stems from accusations that the state was misled by the principals, underwriters and economic-development officials when it issued $75 million in taxpayer-backed bonds for the now-defunct video game company. The company filed for bankruptcy two years after receiving the money in 2010.
First Southwest says in the objection that Rhode Island lawmakers have changed legislation to benefit Commerce RI and the state in the ongoing lawsuit. •
