NEW YORK—A state judge's decision to throw out the bid-rigging convictions of two former Marsh Inc. executives caps a series of failures by prosecutors targeting individual brokers named in 2004 Spitzer investigations.

While the decision to overturn the convictions was unusual, it was not entirely surprising given the outcome of the other charges in the case, legal experts say.

In his ruling, New York County Supreme Court Judge James A. Yates overturned the convictions of former Marsh Managing Directors William Gilman and Edward J. McNenney, citing new evidence that “undermines the court's confidence in the verdict.”

The evidence included undisclosed documents that would have been “invaluable” to the defense and contradictory statements by witnesses who cooperated with prosecutors, according to the 25-page opinion issued July 2.

The first former Marsh executives to face trial in the case were accused of colluding with employees at various insurers including American International Group Inc., ACE USA, Liberty International Insurance Co. and Zurich American Insurance Co. to rig the market for excess casualty insurance between 1998 and 2004.

Judge Yates convicted Messrs. Gilman and McNenney in February 2008 of violating New York antitrust law, but acquitted them of 20 counts of fraud and larceny. They were sentenced to 16 weekends in jail but appealed the convictions.

At trial, prosecutors called Mr. Gilman the “architect” and Mr. McNenney the “enforcer” of the price-fixing scheme.

“This is total vindication,” said Robert Cleary, a partner with Proskauer Rose L.L.P. in New York and Mr. Gilman's attorney. “There was a massive amount of evidence withheld and the judge concluded that, had that evidence been turned over, there would have been a different outcome,” he said.

“We are very pleased with the judge's decision,” said Scott D. Devereaux, a partner with Cooley Godward Kronish L.L.P. in Palo Alto, Calif., and Mr. McNenney's attorney.

A spokesman for New York Attorney General Andrew Cuomo's office said “we are reviewing the decision and contemplating an appeal.”

However, experts say an appeal by the attorney general is unlikely.

In January, the men's attorneys asked Judge Yates to vacate the convictions, alleging prosecutorial misconduct. In what is called a 440 motion, the attorneys accused prosecutors of withholding thousands of documents, including multiple forms of exculpatory and impeachment evidence. The evidence was disclosed only during a later trial against three other Marsh executives, all of whom were acquitted, the attorneys said.

The material—including 700,000 pages of documents from Liberty International Insurance—challenges the prosecution's theory that Liberty Mutual and other insurers joined a conspiracy to fix prices, rig bids and allocate customers, according to the ruling.

“It's pretty clear that Judge Yates was never particularly comfortable enforcing the antitrust claim from the beginning,” said James M. Burns, a partner and chair of the antitrust group at Williams Mullen in Washington. “When the additional information became known, it was weighing on his mind whether he came to the right decision,” said Mr. Burns, who was not involved in the case.

“Vacating a conviction is highly unusual,” said James Carbin, a partner with Duane Morris L.L.P. in New York, who also was not involved in the case. “But I think it speaks volumes about the nature of the investigation. It's a very damning indictment of the prosecution.”

The decision was the latest loss in the state's six-year probe of anti-competitive practices in the insurance industry. The case—brought by former New York Attorney General Eliot Spitzer—was tried under his successor, Mr. Cuomo.

Last October, Judge Yates acquitted three former Marsh executives of all charges in the case after a nearly 11-month trial. In November, the judge dismissed charges against three other defendants before their trial began.

Overturning the convictions of Messrs. McNenney and Gilman, in addition to Judge Yates' decision earlier this year to reduce or dismiss charges against more than a dozen executives who pleaded guilty in the case, means that none of the convictions or guilty pleas has been upheld.

“It's an ending to a very sad story. The entire episode has been very difficult on the insurance industry,” said Ken A. Crerar, Washington-based president of the Council of Insurance Agents & Brokers.

“Spitzer came after the industry with a very wide net, but at the end of the day, it appears that there was more smoke than fire,” said Tim Cunningham, a principal at OPTIS Partners L.L.C. in Chicago.

“The case was, from the outset, a circumstantial case, with no direct proof of insurance company collaboration” in a conspiracy, Judge Yates wrote in his opinion. The convictions of Messrs. Gilman and McNenney rested on testimony of several key witnesses who had “very favorable cooperation agreements.” Yet, each at various times also gave sworn testimony “discrediting, even contradicting, their trial testimony,” Judge Yates wrote.

Marsh itself did not face any criminal charges in the case, but it did pay $850 million in January 2005 to end officials' bid-rigging and fraud probes.

While the results have left prosecutors reeling, several observers said the investigation was not entirely a failure.

“This has been a watershed in terms of the way insurers view antitrust laws. Compliance with antitrust laws is taken very seriously, and that's a direct result of Mr. Spitzer,” Mr. Carbin said.

“It did bring about a fair amount of transparency (regarding contingent commissions) and a healthy debate on ethics, but it seems like an expensive way to get there,” Mr. Cunningham said.

At trial, prosecutors pointed to the broker's contingent commission system that was in place at the time as motivation for the scheme.

“I do think (Mr.) Cuomo has viewed this case a little differently than (Mr.) Spitzer,” and it's difficult to imagine Mr. Cuomo would appeal the ruling, Mr. Burns said.

Mr. Cuomo, a Democrat, is running for New York governor.