Appeals court reverses conviction of ex-Wall Street trader

May 3, 2018

An appeals court in New York says a former Wall Street trader can be released from prison because he was improperly convicted of fraud

NEW YORK — A former Wall Street trader can be released from prison after he was improperly convicted of fraud, an appeals court said Thursday, the second time the court has overturned a conviction against him.

The 2nd U.S. Circuit Court of Appeals in Manhattan said Jesse Litvak, 43, can be freed from a prison where he was serving a two-year sentence. He was convicted of one count of securities fraud and acquitted of nine other counts last year. He had been scheduled for release next February.

Prosecutors said Litvak duped clients into paying artificially increased prices or accepting artificially decreased prices for bonds they were buying or selling, collecting $6.3 million in fraudulent profits for his company.

But a three-judge panel concluded his conviction must be overturned because the New Haven, Connecticut, judge who oversaw the trial erred in allowing some evidence to be seen by the jury.

It was Litvak's second trial following an earlier conviction on charges of securities fraud, Troubled Asset Relief Program fraud and making false statements.

After his first trial, authorities said he was the first person convicted of a crime related to a program that used bailout funds in the financial meltdown to restart trading markets for mortgage-backed securities.

But in 2014, the 2nd Circuit reversed Litvak's conviction. It said the judge excluded expert testimony unjustly, that evidence was insufficient to support a verdict on some counts, that the jury was not sufficiently instructed on the law, and that his alleged misstatements could not be proven to be material to the Department of the Treasury, the pertinent governmental entity.

Litvak was a registered broker-dealer and managing director at Jefferies & Co. Inc. who worked on the company's trading floor in Stamford, Connecticut. He was fired in 2011.

Litvak's attorney declined comment Thursday. A spokesman for prosecutors said the government was reviewing the ruling but had no immediate comment.