The 2nd U.S. Circuit Court of Appeals in New York said there was a lack of evidence for the jury to find that misstatements made by Jesse Litvak, the former trader, were material to the U.S. government.

It also said the trial judge exceeded her authority in excluding expert testimony on Litvak’s behalf with regard to the securities fraud counts, and that this error was not harmless.

The appeals court returned the case to the district court for a new trial on the securities fraud charges.

A spokesman for U.S. Attorney Deirdre Daly in Connecticut said that office is reviewing the decision. A lawyer for Litvak was not immediately available for comment.

Litvak had been free on bail while he appealed his March 2014 conviction and two-year prison term for securities fraud and defrauding the Treasury Department’s Troubled Asset Relief Program.

Prosecutors said Litvak, hoping to boost his own pay, misled customers, including participants in TARP’s Public-Private Investment Program, about bond prices, helping Jefferies boost profit by $2.25 million.

Writing for the appeals court, however, Circuit Judge Chester Straub found a lack of evidence that Litvak’s misstatements were “reasonably capable of influencing a decision of the Treasury,” even if they frustrated the Treasury’s investment goals.

He also said Chief Judge Janet Hall of the New Haven, Connecticut, federal court, who oversaw Litvak’s trial, erred in excluding defense testimony from a portfolio manager discussing the concerns of investors who trade bonds.

Jefferies, a unit of Leucadia National Corp, in March 2014 entered a non-prosecution agreement and agreed to pay $25 million to end U.S. probes of its supervision of Litvak and other traders.