The controversial conviction of NYSE specialist David Finnerty was thrown out by a federal judge this morning. Finnerty was convicted back in October after a surprisingly brief jury deliberation that led some to wonder whether the verdict would stand up on appeal. Now we know it didn't.
U.S. District Judge Denny Chin in New York today set aside the jury's guilty verdict. Jurors in Manhattan federal court found that Finnerty, who worked at Fleet Specialist Inc., illegally inserted his firm as a middleman in trades that should have been made directly between two customers.
The ruling is the latest blow to prosecutors in what was the biggest crackdown on illegal trading at the Big Board. Of 15 specialists charged with fraud by the U.S. in April 2005, three, including Finnerty, were convicted at trial, and two pleaded guilty. Two other specialists were acquitted, and prosecutors dismissed charges against seven others. One remains a fugitive.
Chin said prosecutors failed to present enough evidence to show that investors were defrauded. "What did customers expect when presenting an order to specialists?'' Chin said in a 37-page ruling. "What did customers `trust' the specialists to do? None of these questions were answered by the evidence.''