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SEC, Wells Fargo Securities agree to settlement in bond offering suit

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SEC, Wells Fargo Securities agree to settlement in bond offering suit

The U.S. Securities and Exchange Commission and Wells Fargo Securities LLC have agreed in principle to settle a fraud lawsuit over a $75 million bond offering for defunct video game company 38 Studios.

The settlement is subject to final approval by the SEC, which cannot rule on the matter until the ongoing government shutdown has ended. The two parties have asked to stay the court case until the government shutdown is over so that the SEC has time to consider and approve the settlement. The new deadline for a decision from the SEC would be 45 days after the SEC resumes normal operations.

Terms of the settlement were not disclosed.

The SEC sued the Wells Fargo & Co. unit and Rhode Island Commerce Corp., which earlier settled, for allegedly defrauding investors in the bond offering and failing to disclose that 38 Studios needed at least $75 million but would only receive $50 million in proceeds from the offering.