New York Attorney General Eliot Spitzer has suffered his first major defeat in his campaign to clean up big business.
Mr Spitzer has a reputation for going after big business
Former Bank of America broker Theodore Sihpol was acquitted by a US court of 29 counts of helping a hedge fund to trade mutual funds illegally.
A New York Supreme Court judge also declared a mistrial on four counts on which the jury was deadlocked.
The news will be seen as a setback for Mr Spitzer, who is pursuing a campaign against malpractice on Wall Street.
The trial was the first of Mr Spitzer's inquiries into stock research, mutual fund and insurance practices on Wall Street.
Mr Sihpol's defence team were "delighted" with the verdict
"This is a very significant blow to Eliot Spitzer's enforcement efforts," said Robert Heim, a partner at Meyers & Heim LLP in New York.
"Mr Sihpol's victory will strongly encourage other defendants to consider going to trial rather than settling."
Mr Spitzer, who is running for Democratic governor of New York state in 2006, is currently suing insurance giant AIG and its former boss Maurice Greenberg for allegedly falsifying accounts to bolster the company's earnings.
In January, US insurance broker Marsh & McLennan paid $850m (£451m) to settle charges brought by Mr Spitzer's office that it had conspired with insurance providers to rig the marketplace.
The jury found Mr Sihpol not guilty on multiple counts of grand larceny, fraud and scheming to defraud, and falsifying business records.
It remained deadlocked on another two counts of fraud and two counts of falsifying records.
Defence attorney Even Steward said he was "delighted" with the verdict.
"We hope that with this verdict (Mr Sihpol) can now turn to restoring his life and reputation," he said.
A spokesman for Mr Spitzer described the result as "disappointing", but added the attorney general's office would "continue to aggressively pursue the interests of investors".