RICC is settling SEC charges that revolved around $75 million of muni bonds that it privately placed in November 2010 to help finance a project being developed by Massachusetts-based 38 Studios, whose board chair and majority shareholder was former baseball player Curt Schilling.

WASHINGTON — The Rhode Island Commerce Corp. on Wednesday agreed to pay $50,000 to settle Securities and Exchange Commission fraud charges over misleading investors of privately placed bonds for the failed video game company 38 Studios.

The RICC agreed to the monetary penalty in a joint motion with the SEC that the two parties filed in the U.S. District Court for the District of Rhode Island. The RICC, which agreed to the proposed settlement without admitting or denying the allegations in the SEC's original complaint, would also be enjoined from future violations of the federal securities anti-fraud laws if Judge John McConnell Jr. approves the settlement.

The proposed settlement follows statements from the RICC and SEC in January that the parties had reached an agreement in principle.

The RICC published a release on Wednesday announcing the details of the settlement but did not make any further comments. The SEC declined to comment on the pending agreement.

The final judgment would respond to charges the SEC brought in March 2016 against the RICC, its underwriter, and three individuals. The complaint uses the RICC's former name, the Rhode Island Economic Development Corp.

The SEC charged in the suit that the parties defrauded investors by not revealing 38 Studios' complete financial status or the extent of the compensation arrangement that existed between 38 Studios and the underwriter, Wells Fargo Securities. First Southwest, now Hilltop Securities, the RICC's financial advisor at the time of the alleged fraud, had already settled with the SEC over charges that it failed to document its advisory relationship with the agency for seven months.

The SEC charges revolve around $75 million of muni bonds that the RICC privately placed in November 2010 to help finance a project being developed by Massachusetts-based 38 Studios, whose board chair and majority shareholder was former baseball player Curt Schilling. The RICC loaned 38 Studios $50 million of bond proceeds and used the remaining funds to pay related bond offering expenses and establish a reserve fund as well as a capitalized interest fund.

The loan was meant to be repaid with revenues 38 Studios generated from a multi-player video game project code-named Project Copernicus. However, the bond placement memo failed to disclose to investors that 38 Studios needed at least $75 million to produce the game and even more money to relocate to Rhode Island. The video game company never obtained the extra financing and eventually defaulted on its loan in 2012.

The SEC's complaint contained evidence that the commission said shows RICC either knew or should have known about 38 Studios' financing issues before moving forward with the private placement.

Two individuals who had been employed with the RICC -- former executive director Keith Stokes and former deputy director James Michael Saul -- settled with the SEC, agreeing to each pay $25,000. They are also barred from participating in future muni offerings.

SEC litigation is ongoing against Wells Fargo and Peter Cannava, a Wells Fargo banker who the SEC alleges aided and abetted the defrauding of investors.

The RICC sued a number of the participants in the deal in state court and received a total of $61 million in settlements as a result. The state court settlements were with Hilltop Securities, Curt Schilling, Wells Fargo, Stokes, and Saul, among others.

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