George Soros To Appeal Insider Trading Charge

by Ulrika Lomas, for LawAndTax-News.com, Brussels

08 February 2005

The Paris Court of Appeals is set to rule this month on whether billionaire investment guru and philanthropist, George Soros violated French insider trading rules seventeen years ago.

In 2002, Judge Anne-Marie Foncelle ruled that Mr Soros had made use of confidential information in a transaction involving Societe Generale shares, and ordered him to repay EUR2.2 million in illegitimately secured gains.

The disputed transaction involved a share purchase made by Soros' Quantum Fund following an approach in September 1988 by financier Georges Pebereau, who sought to create a partnership of investors and build a stake in the bank.

Although Soros declined to take part in the bid, his Quantum Fund later that month purchased $50 million in SG shares and in three other recently privatised French organisations.

Although Pebereau managed to build up a 9% stake in the bank, the takeover bid collapsed as a result of soaring SG share prices and the refusal of the bank's board to cooperate. The Quantum Fund, according to reports, sold its stake in November of that year.

The prosecution in the 2002 case argued that the investment fund should not have purchased the shares having rejected Mr Pebereau's approach, a viewpoint supported by Judge Foncelle.

However, Mr Soros' legal team plans to argue that the information that the financier was seeking other investors was well known in Paris financial circles, and the fact that Societe Generale was a takeover target was the subject of several media reports at the time.

In an interview with the Bloomberg news service this week, Soros' lawyer, Ron Soffer announced that:

"This was not insider trading. The original decision got its facts wrong and it got the law wrong."

If the appeal, which is scheduled to begin on Thursday, is unsuccessful, Mr Soros' legal team has the option of taking the matter before the Court de Cassation to argue that the law was wrongly interpreted, or claiming before the European Court of Justice that the 14 years taken by the French authorities to bring the matter to court violated their client's right to a timely trial.

Recommended