About a half hour ago the SEC announced it has sued an agency of the State of Rhode Island and the firm of Wells Fargo, as well as several individuals, for fraud in the offering of $50M of bonds by the State to in turn fund 38 Studios in its development of Curt Schillings’ promised video game.  Seems that no one remembered to mention that Schilling had made clear that they needed $75M to finish the project; perhaps the $25M shortfall was not deemed material?

The action reflects growing SEC focus on governmental offerings; first, an attack on the financial links between underwriters and political contributions and, lately, substantive focus on the offerings themselves.

In ancillary cases, two individuals have settled related claims for (unadmitted) aiding and abetting the fraud, a financial advisor to the State settled a claim of failure to document services, and action continues against the State, Wells Fargo and another individual.

As if the State of Rhode Island hasn’t been through enough on this….