Soros Insider-Trading Conviction Upheld by Paris Appeals Court
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PARIS – George Soros’s bid to overturn an insider-trading conviction has been rejected by France’s highest appeals court, ending the billionaire’s fight to erase a legal stain on his 40-year investing career.
The Court of Cassation, the tribunal of last resort in France, ended its review of a March 2005 judgment that Mr. Soros broke insider-trading laws when he bought Societe Generale SA shares in 1988 with the knowledge that the bank might be a takeover target. The Hungary-born financier has been fighting the case for 17 years,
“The court did not respond to one of our key arguments concerning the fact that the length of the proceedings didn’t allow Mr. Soros to have a fair trial,” said Ron Soffer, one of Soros’s lawyers.
The verdict came as the 75-year-old former financier turned his attention from his investing career to political and charitable activities. Mr. Soros had been ordered to pay back $2.8 million in gains. That amount will now be reviewed, Mr. Soffer said.
The 2005 Paris appeals court ruling upheld a 2002 conviction by a first-instance tribunal. The judges rejected Mr. Soros’s contention that he didn’t consider the information that led him to buy Societe Generale shares to be confidential. The French government sold Societe Generale in June 1987 at 407 French francs a share. A year later, after a stock market crash, the shares had fallen to 260 francs.
In September 1988, financier Georges Pebereau sounded out about 20 investors, including an adviser to Mr. Soros, about joining him in building a stake in the bank, according to the case presented in 2002 and in 2005.
Mr. Soros, who never spoke directly to Mr. Pebereau about the investment, declined to take part in the operation. His Quantum Fund that month spent $50 million to buy 160,000 shares of Societe Generale as well as shares in three other companies the French government had sold and whose stock had tumbled.
In October 1988, Mr. Pebereau’s Marceau Investissement built a 9% stake in Societe Generale and tried to get the bank’s management to agree to a takeover. The bank refused, and the effort fizzled when Societe Generale shares surged as high as 600 francs in December of that year.
The defense and prosecution agreed that Mr. Soros was aware of a pending stock market raid on Societe Generale when he bought the shares. They disagreed on whether the information he had was precise and confidential enough to constitute insider trading.