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An appeals court overturned the conviction Thursday of a former top Wall Street executive accused of giving inside information on bank stocks to an X-rated movie actress. The 2nd U.S. Circuit Court of Appeals ordered a new trial for James McDermott Jr., saying he was not given a fair trial and that there was not enough evidence to convict him of conspiracy. McDermott, 49, of Briarcliff Manor, N.Y., was sentenced to eight months in prison after a jury concluded the married executive had given inside information to Kathryn Gannon during an affair. He was released from prison Feb. 14, in the middle of serving his term, while he appealed, said his lawyer, Robert Anello. Gannon, 32, known in the adult film industry as “Marylin Star,” allegedly passed tips from McDermott to another lover, a New Jersey businessman, Anthony Pomponio, 46, of North Caldwell, N.J. The appeals court concluded McDermott, who began an affair with Gannon in 1996, could not be held liable for insider trades made by Pomponio. He and Gannon allegedly made $170,000 in illegal profits. “We decline to hold as a matter of law that a cheating heart must foresee a cheating heart,” a three-judge panel wrote. The panel also said the jury may have been swayed by McDermott’s being tried alongside Pomponio, who was sentenced last year to one year and nine months in prison. The appeals court also said the judge in the case should not have allowed references to Gannon’s “clients,” that could have led jurors to believe she worked as a prostitute or paid escort. The judge had let lawyers say only that Gannon worked as a dancer, model and actress under the stage name “Marylin Star.” She also let prosecutors show that Pomponio believed she “knew a clientele of lawyers, stockbrokers, and such, high-level people.” Gannon was arrested last year at her residence in Vancouver, British Columbia, and is free on $50,000 bail. Extradition proceedings are under way to bring her to the United States.

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