A federal appeals court on Thursday reversed the conviction of ex-brokers accused of illicitly tipping off day traders after finding prosecutors had neglected to turn over key evidence.
The former brokers at Merrill Lynch, Citigroup, and Lehman Brothers Holdings – and day-trading executives they allegedly tipped off – were convicted in a second trial after the first trial ended with a hung jury, Bloomberg Businessweek reported Thursday.
On Thursday, the federal appeals court in Manhattan reversed convictions of both the day traders and the ex-brokers.
The appeals court lambasted federal prosecutors for failing to hand over evidence that would have been favorable to the former brokers and day traders, Bloomberg reported.
In light of prosecutors' missteps the court wondered "whether the government will choose to subject the defendants to yet a third trial."
A lawyer for one of the day traders told Bloomberg the ordeal "broke" the defendants.
“These guys are broke -- this broke them all,” the attorney, Susan Kellman, told Bloomberg. “Thank God these guys had bail pending appeal.”
The brokers were accused of giving day traders access to the so-called "sqwak boxes" they used to discuss upcoming trades.
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