$800K Wells Fargo penalty OK’d in Schilling video game deal
PROVIDENCE, R.I. — A federal judge has approved an agreement for Wells Fargo Securities to pay an $800,000 civil penalty to end a lawsuit by the U.S. Securities and Exchange Commission over Rhode Island’s failed $75 million deal with former Boston Red Sox pitcher Curt Schilling’s video game company, 38 Studios.
The order entered Wednesday in U.S. District Court in Providence brings the yearslong legal battle over 38 Studios close to an end, although it’s not completely over. A Wells Fargo employee who was the lead banker on the 38 Studios deal is the final remaining defendant, and plans to fight the case, his lawyer said.
Wells Fargo did not admit or deny wrongdoing under terms of the judgment.
“We look forward to putting the matter behind us,” Wells Fargo spokeswoman Ann Marie McDonald said.
The state’s economic development agency used bond funding to lure the company from Massachusetts to Rhode Island, where it went bankrupt. The SEC accused Wells Fargo and the economic development agency of making misleading statements when they offered the bonds.
The SEC lawsuit also accuses Peter Cannava, a Wells Fargo banker, of wrongdoing including failing to disclose that 38 Studios needed at least $75 million but would receive only $50 million of proceeds from the offering, leaving a gap of $25 million.
His lawyer, Brian Kelly, said he planned to file a motion by the end of the month asking the court to dismiss the two claims against Cannava, who he said did nothing wrong.
“The company chose to settle. He chooses to fight,” Kelly said.