Rhode Island Commerce agrees to $50K penalty to SEC for role in 38 Studios deal

PROVIDENCE, R.I. — The Rhode Island Commerce Corporation has agreed to pay a $50,000 penalty to settle a lawsuit brought by the U.S. Securities and Exchange Commission over the agency’s role in issuing a $75-million bond to raise cash for Curt Schilling’s now-defunct 38 Studios.

The SEC alleged last March in a civil complaint filed in U.S. District Court, Providence, that the Commerce Corporation and Wells Fargo Securities had defrauded investors with a 2010 bond-offering. The complaint said the bond offering, by the state agency then called the Rhode Island Economic Development Corporation, was “a misleading half-truth.” The bond proceeds were used to finance former Red Sox star Schilling’s video-game company.

The Commerce Corporation did not admit or deny the SEC allegations, according to court documents filed Wednesday. The agency may not use money from any insurance policy to pay its civil penalty, and the SEC may use the money under “Fair Fund” provisions that allow it to pay back investors, court documents show.

The settlement must be approved by U.S. District Court, the Commerce Corporation said Wednesday in a statement.

Read more: http://www.providencejournal.com/news/20170329/ri-commerce-agrees-to-50k-penalty-to-sec-for-role-in-38-studios-deal