NEW YORK, May 3 (Reuters) - A federal appeals court on Thursday overturned former Jefferies Group mortgage bond trader Jesse Litvak’s second criminal conviction for defrauding a customer about bond prices, finding the jury in the case had wrongly been allowed to hear irrelevant evidence.
The ruling from the 2nd U.S. Circuit Court of Appeals comes more than two years after the court threw out Litvak’s first conviction in the case. It sent the case back to the U.S. District Court in Connecticut, where prosecutors may choose to put Litvak on trial a third time.
Thomas Carson, a spokesman for the Connecticut U.S. Attorney’s office, said it was reviewing the decision and declined to comment further. A lawyer for Litvak had no immediate comment.
Prosecutors accused Litvak, 43, of lying to customers such as Invesco Ltd, AllianceBernstein and Soros Fund Management about bond prices from 2009 to 2011, generating $2.25 million of illegal profit for his employer and hoping to boost his own pay.
Jurors in New Haven, Connecticut, in January 2017 convicted the former Jefferies managing director on only one of the 10 counts he faced, which concerned a bond transaction with Invesco. Nonetheless, Litvak was sentenced to the same two-year term he received in 2014 after his first conviction, on 15 counts.
Chief Judge Janet Hall also ordered Litvak to pay a $2 million fine.
In vacating the conviction on Thursday, the 2nd Circuit said that Hall had improperly allowed the jury to hear testimony that an Invesco employee believed Litvak was acting on the employee’s behalf. That belief was incorrect, and therefore irrelevant, but could have confused the jury or turned it against Litvak, the court found.
Jefferies had worked in the Stamford, Connecticut, office of Jefferies, a unit of Leucadia National Corp.
He is one of at least 11 people who has faced civil or criminal charges in a more than five-year federal crackdown on deceptive bond trading practices. (Reporting By Brendan Pierson in New York; Editing by Dan Grebler)