SEC Charges Previously-Barred Investment Adviser with Fraud

The Securities and Exchange Commission today charged a previously-barred North Carolina-based investment adviser with lying to retail investors about the use and value of their investments. The SEC’s complaint alleges that, starting in approximately February 2019, David W. Schamens solicited investments in a purported pooled investment vehicle that would invest in pre-selected stocks, which would then be “auto-traded” by a proprietary algorithm. However, rather than using investor funds to engage in any type of trading, Schamens allegedly used the overwhelming majority of the money for personal expenses and to repay previous investors seeking redemptions. The complaint also alleges that Schamens provided investors with fictitious monthly statements showing returns at times exceeding 80 percent and that he sought to conceal his actions by presenting investors with a phony audit letter verifying transactions and balances in the fund.