By Harry Sandick and Michael Schwartz (May 4, 2018, 4:32 PM EDT) -- On May 3, 2018, the U.S. Court of Appeals for the Second Circuit reversed the conviction of Jesse Litvak, who had been convicted in the District of Connecticut for a single count of securities fraud. Litvak's case has had a long and tortured history — indicted in January 2013, convicted at trial, conviction reversed on appeal, convicted at a retrial, and then imprisoned last fall after the court of appeals denied his application for bail pending appeal. The case raised significant questions about how traders should interact with their counterparties, and asked whether certain types of alleged misstatements made by traders rose to the level of criminal conduct. In the most recent decision by the circuit (Litvak II), the court had the option of ruling that the trader's alleged misstatements were not material as a matter of law — which could have made a dramatic impact in the law of securities fraud — but the court ruled for the government on this issue. Instead, the second appellate reversal did not turn on these larger questions about materiality and market practices, but rather was decided based on the erroneous admission of certain testimony relating to materiality. The court held that this error was not harmless, and remanded the case for possible retrial....