Video Game Bond Offering Leads to SEC Charges

The SEC charged a Rhode Island agency and its bond underwriter Wells Fargo Securities with defrauding investors in a municipal bond offering to finance startup video game company 38 Studios. The SEC alleged that the $75 million bond offering failed to inform investors of the risks of the investments, specifically that 38 Studios faced a funding shortfall even with the loan proceeds and could not develop the video game without additional sources of financing which led to their default.