A U.S. judge threw out a jury's conviction of former New York Stock Exchange floor trader David Finnerty, saying that prosecutors did not adequately prove their case.
The reversal comes four months after Finnerty was convicted in Manhattan federal court on three counts of securities fraud. At the time, the judge said he found the conviction troubling.
In a written ruling, U.S. District Judge Denny Chin said that the government did not prove that Finnerty engaged in fraud "within the meaning of the securities laws." He said that prosecutors did not establish at trial that Finnerty's customers "were misled or defrauded or otherwise deceived."
The judge said that if his ruling were to be reversed by an appeals court, he is also conditionally granting Finnerty's request for a new trial.
Finnerty's attorney Fred Hafetz gave the following statement to CNBC: "We are gratified by the Judge's decision...it was a well-thought-out and meticulous opinion"
The U.S. Attorney's Office in Manhattan, which prosecuted the case, declined to comment.
Prosecutors originally charged 15 former NYSE specialists with fraud in April 2005, contending that they traded ahead of or between customer orders and generated millions in illegal profits between 1999 and 2003. The government, though, has had mixed results in prosecuting the traders and in November dropped five cases that were awaiting trial.