Page 25 - Aruba Today
P. 25
BUSINESS A25
Tuesday 8 March 2016
State, Wells Fargo charged with fraud for 38 Studios deal
MICHELLE R. SMITH A buyer looks through his auction catalogue while standing in a room full of computers during an conflict of interest it didn’t
JENNIFER McDERMOTT auction of the remnants of 38 Studios, former Boston Red Sox pitcher Curt Schilling’s video gaming disclose to investors.
Associated Press company, in Providence, R.I. The U.S. Securities and Exchange Commission on Monday, March 7, Cannava’s lawyer, Brian
PROVIDENCE, R.I. (AP) — 2016, charged Rhode Island’s economic development agency and Wells Fargo with defrauding Kelly, disputed the SEC’s
The U.S. Securities and Ex- investors in the state’s disastrous $75 million deal with the gaming company. contention that Cannava
change Commission on was the lead banker on the
Monday charged Rhode (AP Photo/Stephan Savoia) matter and said he would
Island’s economic devel- fight the action vigorously.
opment agency and Wells million in settlements. Schil- admitting or denying the ing gap, the complaint al- “The SEC is trying to scape-
Fargo with defrauding in- ling has blamed state of- allegations and must each leges. goat a mid-level banker
vestors in the state’s disas- ficials for failing to support pay a $25,000 penalty. “38 Studios’ funding gap instead of focusing on the
trous $75 million deal with his business venture. The SEC complaint says the was known at the time the mistakes of Rhode Island
38 Studios, the failed video A spokesman for Wells Far- officials knew that 38 Stu- Bond Placement Memo politicians,” he said.
game company started by go disputed the SEC’s alle- dios needed at least $75 was sent to investors. It Stokes’ lawyer, Scott Mor-
former Red Sox pitcher Curt gations and said the com- million to bring its game, was not speculative. It was villo, said the settlement
Schilling. pany will respond in court. code-named “Project Co- an existing risk that should represents what his client
The civil complaint, filed in Also named in the SEC com- pernicus,” to completion. have been disclosed to po- hopes is the final chapter in
U.S. District Court in Provi- plaint are former agency But under the deal with the tential investors in the offer- the matter.
dence, accuses the Rhode officials Keith Stokes and Mi- state, the company would ing,” the complaint says. Other representatives for
Island Commerce Corp. chael Saul, and Peter Can- receive only $50 million of Wells Fargo also had a those named in the action
and Wells Fargo Securities nava, a Wells Fargo banker proceeds from the bond “dual role” in the offering, didn’t immediately com-
of making materially mis- on the transaction. Stokes offering. Despite that, the the SEC alleged, represent- ment.
leading statements when and Saul agreed to settle bond offering documents ing both the state agency In a separate but relat-
they sold the bonds used to the SEC charges without failed to disclose the fund- and 38 Studios, a potential ed action Monday, the
fund the deal. SEC announced it settled
Schilling moved his compa- charges with the bond of-
ny from Massachusetts to fering’s financial adviser,
Rhode Island in 2010, after First Southwest Compa-
the agency agreed to give ny, which agreed to pay
it a $75 million loan guaran- $192,400 and didn’t admit
tee. The deal was financed or deny wrongdoing. First
through bonds offered to Southwest is among those
investors. Less than two being sued in the state
years later, 38 Studios ran court lawsuit. The compa-
out of money and closed its ny’s spokeswoman, Patti
doors, filing for bankruptcy. Doyle, characterized the
Schilling is not accused SEC case as a “very minor
of wrongdoing in the SEC administrative matter” and
action, but he and others, said it shouldn’t affect the
including Wells Fargo, are state lawsuit.
being sued by the eco- Democratic Gov. Gina Rai-
nomic development agen- mondo said she wasn’t sure
cy in state court. That case how the SEC action would
has so far netted nearly $17 affect the state lawsuit.q
Verizon to pay $1.4M in ‘supercookie’ FCC settlement
NEW YORK (AP) — Veri- day that it found that Veri- The New York company tary tracking will think twice out explicit consumer con-
zon will pay a $1.35 million zon began using the super- has already changed before proceeding with- sent,” he wrote in an email.
fine over its “supercookie” cookies with consumers in some practices that critics
that the government said December 2012, but didn’t considered most invasive.
followed phone custom- disclose the program un- In an emailed statement,
ers on the Internet without til October 2014. Verizon the company said that the
their permission. Verizon will updated its privacy policy FCC settlement recognizes
also have to get an explicit to disclose the trackers that it had already made
“yes” from customers for in March 2015 and gave adjustments to its ad pro-
some kinds of tracking. people an option then to grams that give consumers
The supercookies landed opt out. more choices.
their name because they The FCC settlement says Nate Cardozo, a staff attor-
were hard, or near-impos- consumers now must opt ney at the Electronic Fron-
sible, to block. Verizon uses in to letting Verizon share tier Foundation, a privacy
them to deliver targeted data with a third party. But watchdog that had been
ads to cellphone custom- for data-collection and critical of the supercookies,
ers. The company wants to sharing within Verizon itself, said the settlement was an
expand its advertising and the company can choose “unqualified win” for con-
mediabusiness and bought to have customers either sumers.
AOL for its digital ad tech- opt in or automatically do “Today’s order will mean
nology in 2015. it and give consumers the that other companies con-
The Federal Communica- option to stop it, a less strin- templating similar involun-
tions Commission said Mon- gent requirement.
