The Securities and Exchange Commission (SEC) and Wells Fargo Securities said in a joint court filing yesterday that they have agreed to settle a lawsuit over 38 studios.
The Securities and Exchange Commission (SEC) and Wells Fargo Securities said in a joint court filing yesterday that they have agreed to settle a lawsuit over 38 Studios.
The studio, known for developing Kingdoms of Amalur: Reckoning, was founded by former Boston Red Sox pitcher Curt Schilling and shut down back in 2012 after running out of money, and has been the subject of a long-running legal battle with the state.
Final approval has been delayed due to the current government shutdown, but lawyers for both parties asked a federal judge to put the case on hold until after the shutdown is over “to give the SEC and its relevant divisions and offices time to consider and approve the settlement-in-principle."
As reported by the Boston Herald, details of the proposed settlement have not been disclosed.
Schilling moved the company from Massachusetts to Rhode Island in 2010 after the Rhode Island Commerce Corp. agreed to give the studio a $75 million loan guarantee.
The SEC said Wells Fargo and the Commerce Corp. allegedly failed to disclose that 38 Studios needed at least $75 million, but would receive only $50 million of proceeds from the bond offering, leaving a $25 million gap.
The complaint filed in 2012 claimed that many of the "defendants knew or should have known, but failed to inform the EDC Board, that 38 Studios was destined to fail according to 38 Studios' own financial projections."
38 Studios filed for bankruptcy less than two years after the move, prompting investigations and lawsuits into the company.
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