A federal appeals court has ordered a new trial for a Connecticut-based securities trader sentenced to two years in prison for allegedly lying to potential investors about mortgage bond prices. Experts say the ruling by the U.S. Court of Appeals for the Second Circuit changes the way future securities fraud criminal trials will play out and could potentially make the cases more difficult to prosecute.
The appeals court said there was nothing wrong with the legal theory used by federal prosecutors to convict Jesse Litvak, but it faulted the trial judge for restricting defense questioning of a witness who was prepared to testify that Litvak’s alleged misrepresentations to bond buyers were nothing out of the ordinary.
