The defendant appealed claiming that he did not meet the statutory definition of an "investment advisor" for three reasons:  1) he claimed that despite selling the notes, he was not in the business of providing securities advice, 2) he did not provide securities advice "for compensation," and 3) at the time he was not a Registered Investment Advisor with the SEC.  

The Court ruled against him on all three points and sentenced him to 10 years in prison based on the upward enhancement for investment advisor related fraud. The significance of the ruling is that the Investment Advisers Act of 1940 itself,  does not define "compensation." The SEC has issued guidance on the term which the Court deferred to, defining compensation as “any economic benefit, whether in the form of an advisory fee or some other fee relating to the total services rendered, commissions, or some combination of the foregoing.” SEC Release, 52 Fed. Reg. at 38403.  Thereby adopting the SEC's broad definition of "compensation" to include almost any economic benefit, whether obtained lawfully or not.