The appeals court also upheld convictions of securities fraud against Charles Zarzecki of Princeton/Newport and Bruce Newberg, the former Drexel trader.

"We owe it all to one man," one Drexel trader told author Connie Bruck.

It was not immediately clear whether the case against Bruce L. Newberg, a former Drexel trader who was indicted along with Mr. Milken, would also be dropped.

Bruce Lee Newberg, a former Drexel trader, was also sentenced to three months in jail and two years' probation and community service.

Four other defendants, including Bruce Lee Newberg, the former Drexel trader, will have to forfeit $200,000 each.

Last month, an indictment was handed up against five officials of that Princeton, N.J., investment firm and a former Drexel trader, Bruce Newberg.

The defendants' lawyers said the Government hopes to make the Princeton/Newport officers and the former Drexel trader testify in two of its most important securities investigations.

Five partners of the New Jersey trading firm and a former Drexel trader were indicted in August and charged with racketeering.

Also named in the Princeton/Newport charges was Bruce Lee Newburg, a former Drexel trader.

Mr. Newberg, the former Drexel trader, was also named in the Milken indictment.