SEC, R.I. near 38 Studios settlement

THE U.S. Securities and Exchange Commission is nearing a settlement with R.I. Commerce Corp. in the ongoing securities fraud lawsuit related to 38 Studios LLC.
THE U.S. Securities and Exchange Commission is nearing a settlement with R.I. Commerce Corp. in the ongoing securities fraud lawsuit related to 38 Studios LLC.

PROVIDENCE – The U.S. Securities and Exchange Commission is nearing a settlement with R.I. Commerce Corp. in the ongoing securities fraud lawsuit related to 38 Studios LLC.
“The commission and [Commerce] have reached a settlement in principle that would resolve the litigation between them,” according to court documents filed recently with the U.S. District Court of Rhode Island. “The settlement is awaiting formal approval by the commission.”
The proposed settlement, which the state expects could be approved early next month, stems from SEC allegations that Commerce, formerly known as the R.I. Economic Development Corp., in 2010 defrauded investors during the issuance of $75 million in bonds for the video game company 38 Studios. The company, owned and run by former Boston Red Sox pitcher Curt Schilling, went bankrupt in 2012, leaving Rhode Island taxpayers on the hook to pay back more than $100 million.
The SEC in March filed a lawsuit against Commerce and its underwriter Wells Fargo Securities, accusing the defendants of failing to disclose such pertinent information as project funding gaps, which denied investors a complete financial picture of the deal.
The charges against Wells Fargo and its lead banker, Peter M. Cannava, are ongoing.

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