After a 14-year investigation, a French court on Friday convicted the US financier George Soros of insider trading and fined him 2.2 million euros (US$2.3 million), the amount prosecutors said he had profited from the trading. Soros, who was not present in the courtroom, called the verdict unfounded and said he would appeal.
Soros, chairman and president of Soros Fund Management, is one of the world's richest fund managers, and probably its most famous. He is best known for making huge and very successful speculative bets in currency markets, and for his extensive philanthropy, most notably in Eastern Europe.
Prosecutors accused Soros of buying stakes in four formerly state-owned companies in France, including one of the country's leading banks, Societe Generale, for his Quantum Endowment Fund in 1988 based on confidential information. The stakes were worth a total of about US$50 million at the time.
Two other defendants in the case -- Jean-Charles Naouri, 53, a former senior official in the French finance ministry, and Samir Traboulsi, 64, a French citizen of Lebanese origin -- were acquitted. At a hearing a month ago, prosecutors recommended fines for all three men, and suggested the US$2.3 million figure for Soros as a minimum penalty.
Michael Vachon, a spokesman for Soros, said from New York that Soros "is sort of taking it in."
The case drew extensive attention in the French news media, in part because of Soros' image as the epitome of the freewheeling financier, but also because it illustrated some of the anomalies of financial oversight in France.
The roots of the case date back to 1987, when the center-right government of the time privatized Societe Generale, a major French banking company. When the Socialist party retook power in an election the next year, the new government sought to regain control of the bank. Seeing an opportunity to profit while helping their political allies, a group of investors connected with the French financier Georges Pebereau devised a plan to get control of Societe Generale, sending its share price soaring.
According to testimony in the trial, an associate of Pebereau told Soros by telephone about the planned bid, hoping to enlist his support. He declined to take part.
Soros' lawyers argued that what Soros was told was not specific enough or confidential enough to justify a charge of insider trading. Further, they argued, before 1990 the French law against insider trading applied only to employees trading in their own company's shares.
"At no point was I in possession of inside information regarding Societe Generale," said Soros, who was in New York on Friday, in a statement. He called the charges against him "without merit" and said he would appeal the verdict "to the highest level necessary."
His lawyers said the case could be appealed in France and to the European Court of Justice in Luxembourg. The extraordinary length of the case would seem to offer strong grounds -- European courts have overturned rulings on that basis in cases that lasted just five years. Prosecutors said the case lasted so long because it took years to get some needed documents from other countries.
Soros' lawyer, Bernard du Granrut, told reporters on Friday that "an entire range of quite particular issues that we raised were not even considered by the court."
Soros had never before been convicted of financial misdeeds. In 1979, he signed a consent decree with the Securities and Exchange Commission in a civil proceeding relating to his trading in the shares in a US computer manufacturer that was about to issue fresh shares of stock.
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