SEC Subpoenas Rhode Island Commerce Corporation for Information on 38 Studios Deal

The U.S. Securities and Exchange Commission has subpoenaed the Rhode Island Commerce Corporation for information related to the state’s $75-million investment in former Red Sox pitcher Curt Schilling's 38 Studios video-game company, according to a Providence Journal report.

Two lawyers confirmed with the paper that the subpoenas were sent out to the agency. In December of 2013, the SEC requested depositions and exhibits related to the state’s lawsuit against Schilling and key state officials who crafted the loan deal that brought 38 Studios to Rhode Island. The Rhode Island Commerce Corporation is the new name of the state’s former Economic Development Corporation, which sold $75 million in bonds to provide cash for Schilling’s company.

The SEC’s December request went directly to the New-York based law firm, Cohen & Gresser, which is representing the agency. Thomas E. Carlotto, of Shechtman Halperin Savage LLP is serving as general counsel for the Commerce Corporation. An EDC spokeswoman confirmed last September that an SEC inquiry was underway.

38 Studios filed for bankruptcy in spring 2012, and the SEC subsequently began an inquiry into the state agency’s loan guarantee to the failed company. An EDC spokeswoman said last September that the agency had hired the New York law firm to help staffers deal with the watchdog agency’s inquiries.

In November 2012, the state filed a lawsuit against many involved in the deal including Schilling and other 38 Studios executives; Keith W. Stokes, the former EDC executive director who resigned; the EDC’s former deputy director, J. Michael Saul; and lawyers and financial firms that worked on the loan deal, including Wells Fargo Securities, LLC; Barclays Capital PLC; and First Southwest Company, the state’s financial adviser on the loan guarantee.

Source: Providence Journal

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