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. Last Updated: 07/27/2016

Soros Convicted Of Insider Trading

PARIS -- After a 14-year investigation, a French court on Friday convicted American financier George Soros of insider trading and fined him 2.2 million euros ($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 successful speculative bets in currency markets, and for his extensive philanthropy, 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 $50 million.

Two other defendants in the case -- Jean-Charles Naouri, 53, a former senior official in the French Finance Ministry, and Samir Traboulsi, 64 -- were acquitted. At a hearing a month ago, prosecutors recommended fines for all three men, and suggested the $2.3 million figure for Soros as a minimum penalty.

Michael Vachon, a spokesman for Soros, said by telephone from New York that Soros "is sort of taking it in."

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 French financier Georges Pebereau devised a plan to acquire control of Societe Generale, sending its share price soaring.

According to testimony, 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.

Unlike U.S. law, French law does not provide for civil enforcement actions in insider trading cases; they may be pursued only as criminal matters.

In an appearance before the court in November, Soros said: "I have been in business all my life, and I think I know what is insider trading, and what it isn't."

The unsuccessful bid for Societe Generale by Pebereau, whose brother Michel Pebereau is chairman of BNP Paribas, formed part of a larger political intrigue involving Francois Mitterrand, who sought after winning re-election as president in 1988 to bring several large French companies under the sway of investors supporting his Socialist Party.