UNITED STATES SECURITIES AND EXCHANGE COMMISSION

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against David Sheldon Wells ("Wells" or "Respondent"). In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. The Commission finds that on February 27, 2023, a final judgment was entered against Wells by default, permanently enjoining him from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act, in the civil action entitled Securities and Exchange Commission v. David Sheldon Wells, Civil Action Number 1:22-CV05113, in the United States District Court for the Northern District of Illinois. The Commission's complaint alleged that Wells misappropriated over $683,000 from three of his investment advisory clients, fraudulently soliciting the clients to give him money to invest on their behalf, but transferring the funds to a personal brokerage account, where Wells lost most of the funds through risky options trading.

Order

Bar (Permanent)

Participating in any Penny Stock offering

Indefinite

6/17/2024

Association with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or NRSRO

Indefinite

6/17/2024

Penny Stock Bar

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Plaintiff United States Securities and Exchange Commission (the "SEC" or "Commission") alleges that from at least October 2020 through July 2021, while working as a representative of an SEC-registered broker-dealer and investment advisory firm ("Firm A"), Defendant David Sheldon Wells ("Wells") misappropriated over $683,000 from three of his investment advisory clients. Wells fraudulently solicited the clients to give him money to invest on their behalf through Firm A. He told the clients to purchase cashiers' checks made out to a corporate entity that he created shortly before misappropriating their funds. Wells then transferred the clients' funds to personal brokerage accounts owned or controlled by him, where he lost nearly all the funds through risky options trading. Wells also spent some of his clients' funds on personal expenses. Wells accomplished his scheme by making false statements and misleading omissions to the clients about how he planned to invest their money and by creating a shell entity that he used to conceal from his clients that they were writing checks to Wells. Wells admitted to engaging in this fraudulent scheme. In a July 2021 resignation letter to his employer, Wells confessed to using his clients' money for "very risky" options trading and said he thought he "deserve[d] to go to jail" for what he had done. By making material misrepresentations and omissions to investors, and by misappropriating over $683,000 of client assets, Wells has committed securities fraud in violation of 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.

Judgment Rendered

Civil and Administrative Penalty(ies)/Fine(s)

Disgorgement

$683,000.00

Monetary Penalty other than Fines

Injunction

undertakings

FINRA

Without admitting or denying the findings, Wells consented to the sanction and to the entry of findings that he failed to appear for on-the-record testimony or to produce documents requested by FINRA in connection with its investigation into his potential misconduct while at his member firm.

Acceptance, Waiver & Consent(AWC)

Bar (Permanent)

All Capacities

Indefinite

9/20/2021

Fifth Third Securities

Voluntary Resignation

At the time of termination, David Wells admitted misappropriating funds from three clients.