The conviction of three former General Electric Co. employees for conspiring with brokers to fix below-market rates on the interest that GE pays to cities on municipal bonds have been thrown out by a federal appeals court.

A 2-1 panel of the U.S. Court of Appeals for the Second Circuit said Monday that the statute of limitations had run out on the government in its prosecution of Peter Grimm, Dominick Carollo and Steven Goldberg for rigging the market on interest rates.