New judgment released by Colorado Court of Appeals regarding “Wizard of Wall Street” case

DENVER — The Colorado Division of Securities, part of the Department of Regulatory Agencies (DORA), announced today that a Colorado Court of Appeals has reaffirmed a summary judgment and restitution order for Marc Mandel, known as the self-described “Wizard of Wall Street,” and his company Wall Street Radio, Inc., after an appeal by Mandel, whose attorney claimed that he was not operating as an unlicensed investment adviser on either his radio show or via an online auto-trading platform. Mandel and the company were the subjects of the summary judgment in August of 2015 and were ordered to pay $80,000 in restitution and received a permanent injunction the following October.

This decision reinforces a previous court’s ruling that Mandel—through both his radio show devoted to securities and investments and a website that offered investment-related services to paying members— was required under the Colorado Securities Act to possess a license, which he did not. The appeals court additionally ruled that it was lawful to order restitution paid to eighty of the investors who utilized Mandel’s auto-trading services, stating that “defendants provided personalized investment advice to their subscribers by: 1) effectively executing discretionary securities trades on behalf of their clients as a lead trader on an auto-trading platform and 2) responding to direct investment questions from clients through a service called ‘crystal ball readings’…violating [the Colorado Securities Act].”

In October of 2015 ruling, Mandel and Wall Street Radio were also barred from acting in any capacity as a broker-dealer, sales representative, investment adviser or representative in the state of Colorado. The defendants were similarly restrained from further violations of the Colorado Securities Act. Under review, the appeals court vacated this part of the order, citing as a reason that part one of the injunction lacks specificity. Upon return to a trial court, this injunction may be renewed with greater detail as to the actions from which the defendants are restrained.

“We are pleased that the appeals court agreed that auto-trading by a lead trader required licensing as an investment adviser. This is the first ever appeals court decision to reach such a conclusion in the nation. Offering direct investment-related services for compensation needs to be regulated in order to prevent the fraud and misleading information that we so often see in our investigations at the division,” stated Securities Commissioner Gerald Rome. “While the appellate court took issue with the broad injunction, we will obtain a more specific one from the trial court.”

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