David Sheldon Wells of Chicago, Illinois, a stockbroker registered with Fifth Third Securities Inc., is the subject of an enforcement action initiated by Securities and Exchange Commission (SEC) in which the regulator is seeking sanctions against Wells based upon allegations that Wells misappropriated funds. SEC v. David Sheldon Wells, No. 1:22-cv-05113 (September 20, 2022).
According to the Complaint, between October of 2020 and July of 2021, while employed as a stockbroker and investment advisor representative at Fifth Third Securities, Wells stole more than $683,000.00 from three customers he was advising. Wells allegedly dishonestly asked these customers to provide him with money to invest for them through Fifth Third Securities. The Complaint alleges that he instructed them to buy cashier’s checks payable to a business entity that he established just prior to stealing their money.
After that, Wells purportedly moved the customers’ money into personal investment accounts that he owned or controlled, where he gambled away most of the money in high-risk options trading. SEC claimed that Wells also used some of his customers’ money for personal expenditures.
The Complaint alleges that Wells was able to carry out his fraudulent operation by lying and misleading the customers about his investment plans and by setting up a bogus entity to hide that the customers were writing checks directly to him.
Wells purportedly confessed to his fraudulent activities. In a resignation letter to Fifth Third Securities in July of 2021, Wells reportedly admitted to using his customers’ money for speculative options trading and expressed that he believed he deserved to be jailed for his actions.
The Complaint alleges that by lying to investors, hiding important facts, and stealing over $683,000.00 of customer funds, Wells violated Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, and Investment Advisers Act of 1940 Sections 206(1) and 206(2).
Public Disclosure shows that Wells has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity because Wells failed to testify and provide information and documents to FINRA when it investigated the basis of Wells’ termination as a stockbroker. Letter of Acceptance, Waiver, and Consent No. 2021071998001 (September 20, 2021).
According to the AWC, Wells was asked by FINRA to testify and provide documents on August 24, 2021. The AWC stated that Wells failed to comply with FINRA’s request. He was sent a second request to appear for testimony and provide documents but had again failed to comply. The AWC stated that on September 3, 2021, FINRA received an email from Wells, who relayed that he would not cooperate in the investigation at any point. The regulator found that Wells violated FINRA Rules 2010 and 8210.
Wells’ stockbroker registration with Fifth Third Securities Inc. was terminated on July 16, 2021.
