SEC Charges Former Registered Investment Advisor Representative with Securities Fraud

Litigation Release No. 25513 / September 21, 2022

Securities and Exchange Commission v. David Sheldon Wells, No. 1:22-cv-5113 (N.D. Ill. filed Sept. 20, 2022)

The Securities and Exchange Commission filed charges against David Sheldon Wells, a former representative of an SEC-registered broker-dealer and investment advisory firm, for misappropriating advisory client funds.

The SEC's complaint alleges that from at least October 2020 to July 2021, while working as a representative of an SEC-registered broker-dealer and investment advisory firm, Wells misappropriated over $683,000 from three of his investment advisory clients. The complaint alleges that Wells fraudulently solicited the clients to give him money to invest on their behalf through the broker-dealer and investment advisory firm. According to the complaint, Wells told the clients to purchase cashiers' checks made out to a corporate entity that he created shortly before misappropriating their funds. As alleged in the complaint, Wells then transferred their funds to personal brokerage accounts owned or controlled by him, where he lost nearly all the funds through risky options trading. The complaint alleges that Wells also spent some of his clients' funds on personal expenses.

The SEC's complaint charges Wells with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC is seeking permanent injunctions, disgorgement and prejudgment interest, and a civil penalty against Wells.

The SEC's investigation was conducted by Austin Stephenson and Pesach Glaser, with the assistance of Brian Shute in the Office of Investigative and Market Analytics. The case was supervised by Brian D. Fagel. The litigation will be led by Peter Senechalle and Daniel J. Hayes.