The 2nd U.S. Circuit Court of Appeals threw out the convictions of Michael Hayward and Michael Stern, who were convicted in July 2006 and sentenced to six months in prison.

Hayward, 57, and Stern, 55, who had worked for Van der Moolen Specialists USA LLC, were the only specialists still facing prison time after convictions at trial. They had been accused of stealing $1 million apiece by skimming small amounts of money from stocks they oversaw.

The ruling all but ended a prosecution in which the government accused the powerful floor supervisors of using their inside positions to earn an estimated $20 million illegally for themselves and their firms.

Specialists play the crucial role of matching buyers and sellers in individual stocks, though their numbers have declined as computers have taken a larger role in the trading of securities.

Prosecutors targeted the specialists after concluding that they sometimes pocketed pennies for themselves or their firms from each trade by purchasing a stock and quickly flipping it for a slightly higher price.

Defense lawyers had argued that it would be absurd for highly paid specialists — many of them have seven-figure incomes — to try to make minuscule amounts of money each day in such a way. Instead, they said, prosecutors were highlighting innocent mistakes made on fewer than 1 percent of trades each specialist handled.