Cranston, Rhode Island Mayor and GOP gubernatorial candidate Allan Fung is urging state lawmakers in Providence to pass two bills to prohibit the state from making payment on the failed 38 Studios investment.
During a State House press conference earlier in the week, Fung said that no payments should be made until there is a "thorough investigation" of the issue, including an allegation by one-time GOP congressional candidate Michael Riley that insider trading occurred.
Riley alleged that $1 million in bond holdings were sold the day before 38 Studios laid off all of its employees prior to filing for bankruptcy protection. Fung said the bond trade a day before the layoffs suggested a troubling leak.
"Obviously, it is reasonable to infer that this bond holder received non-public information that resulted in a profit of more than $200 thousand. We need a full and thorough investigation and I have called for the Securities and Exchange Commission to conduct an investigation of possible insider trading. I also am calling for complete disclosure of the identities of all of the bondholders," Fung said.
"It is clear that there are more than enough questions to justify denying repayment at this time," Fung added.
Source: Providence Journal