The group was convicted in 2008 after a six-week trial for their roles in an alleged bogus reinsurance deal that helped AIG inflate its loss reserves by $500 million.

Ferguson was sentenced to two years in prison later in 2008, followed by sentences of four years for Milton, one year each for Garand and Graham, and 18 months for Monrad. All were free on bail as the appeal was heard.

The appeals court says the trial judge should not have allowed prosecutors to show the jury a chart of AIG’s plummeting stock price after it became known regulators were looking into the alleged 2001 finite reinsurance transaction with General Re, a unit of Warren Buffett’s Berkshire Hathaway.

The mere suggestion that the reinsurance transaction caused AIG’s stock to dive was “without foundation,” and since AIG’s role in the collapse of the financial market in 2008 was well known, the charts “prejudicially cast the defendants as causing an economic downturn that has affected every family in America,” says the ruling.

The trial judge also made a mistake with jury instructions, the ruling continues.

The case against the former executives was the result of an investigation by the U.S. Securities and Exchange Commission and former New York Attorney General Eliot Spitzer.

Former AIG CEO Maurice “Hank” Greenberg and Howard I. Smith, former AIG CFO, still face allegations related to the finite reinsurance transaction. Appeals in the case continue to be hashed out.