© Philippe Wojazer/ReutersGeorge Soros was convicted of insider trading by a French appeals court in 2002.
Billionaire investor George Soros lost a challenge to his 2002 insider trading conviction, with the European Court of Human Rights saying French market regulations were clear enough to hold him responsible.

France didn't violate Soros's rights in punishing him criminally for trading on inside information about Societe Generale SA in spite of the market regulator's conclusion that its rules were unclear, the Strasbourg, France-based court said.

"Soros was a famous institutional investor, well-known to the business community and a participant in major financial projects," the court said in a statement about its ruling. "As a result of his status and experience, he could not have been unaware that his decision to invest" risked violating insider- trading laws, and given "there had been no comparable precedent, he should have been particularly prudent."

Soros, 81, was convicted in 2002 of insider trading and ordered to repay 2.2 million euros ($2.9 million) he'd made from the share purchase and subsequent sale after a Paris court found he'd acted with the knowledge that the bank might be a takeover target. While prosecutors filed criminal charges, French stock market regulators didn't pursue Soros, saying insider-trading laws were too vague to determine whether he'd broken them.

'Inconceivable' Verdict

"It is inconceivable to expect that the citizen has a better understanding of the law than the authority in charge" of market regulation, Ron Soffer, Soros's lawyer, said today. "The opinion of the regulatory authority is an irrebuttable presumption as to the lack of clarity of the law."

Soros will appeal the four-to-three ruling to the court's Grand Chamber, Soffer said.

As part of its program to shed state-owned companies, the French government sold Societe Generale (GLE) in June 1987 at 407 French francs (then $63) a share. After a stock market crash a year later, the shares had fallen to 260 francs. In September 1988, French financier Georges Pebereau sounded out investors including an adviser to Soros about joining him in building a stake in Societe Generale.

While Soros declined to take part in that operation, that month his Quantum Endowment Fund 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.

Soros Stake

Pebereau's takeover effort failed when Societe Generale management refused and shares surged. Soros had sold off the stake by November, he said during his initial 2002 trial, after he became convinced during an October trip to Paris that the attempt was driven by the desire of a newly elected French government to place allies on the boards of companies that the previous government had sold.

The Human Rights court called the insider-trading rules at the time of Soros's investment in Societe Generale "quite general" and said Soros was the first in France to be prosecuted for "that type of offence." Still the court said it wasn't persuaded a subsequent change in the rules was directly related to the Soros case.

Soros, best known for making $1 billion in 1992 betting the Bank of England would be forced to devalue the pound, turned to the human rights tribunal in December 2006 after he lost his appeal to the Cour de Cassation, France's top court, which quashed the fine while upholding the conviction.

Soros said in July he would return money to outside investors in his $25.5 billion Soros Fund Management LLC by the end of the year and focus on managing assets solely for himself and his family.

Soros has given away more than $8 billion in the last 30 years to promote democracy, foster free speech, improve education and fight poverty around the world, he said in a recent essay. He announced on Oct. 3 that he would give $27.4 million over the next five years to the Millennium Villages program, a United Nations project to eradicate poverty in Africa.