PARIS - Billionaire investor George Soros this week gets a chance to argue that the French court that convicted him of insider trading in 2002 made a mistake.

The Paris Court of Appeals will hear Soros's arguments this week and make a decision a few weeks later on whether to uphold or overturn the original verdict.

Soros, 74, is appealing to quash the only insider trading charge of his 40-year investing career.

"This was not insider trading," said his lawyer Ron Soffer. "The original decision got its facts wrong and it got the law wrong."

Soros used confidential information to trade shares in French bank Societe Generale SA during a takeover battle in 1988, Judge Anne-Marie Foncelle ruled after a week-long trial in 2002. He was ordered to pay back his 2.2 million ($3.9 million) in gains. That amount was worth US$2.3 million ($3.2 million) at the time of the judgment, and is now worth US$2.9 million.

Through a spokesman, Soros said he "maintains his innocence and looks forward to the opportunity to present his case to the court."

In France, a suspect is presumed innocent until the final appeal is completed. French appeal trials can review the finding of facts in the original trial.


During the 2002 trial, the court didn't ask for punitive damages in recognition of the 14 years it took to take the case to trial.

The French Government sold Societe Generale in June 1987 at 407 French francs (then US$63) 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 several investors, including an adviser to Soros, about joining him in building up a stake in the bank, according to the case presented in 2002.

Soros, who never spoke directly to Pebereau about the investment, declined to take part in the operation.

But his Quantum Fund that month spent $50 million to buy shares in Societe Generale and three other companies the French Government had sold and whose shares had tumbled.

In October 1988, Pebereau's Marceau Investissement built up a 9 per cent 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 as other investors piled in.

Soros said he sold all those shares in November 1988 after a visit to Paris convinced him that Pebereau's takeover 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 2002 verdict agreed with prosecutor Marie-Christine Daubigney that Soros, having been invited to take part in the takeover, shouldn't have bought the shares.

Soffer said the information Soros had in September didn't meet the French definition of insider information, which is precise and confidential information that eliminates the usual risk of stock market investing.

Pebereau's plans were still vague at the time he contacted Soros, and Soros didn't think the information was secret because Pebereau's efforts to sound out other investors was being openly talked about in Paris financial circles, Soffer said.

French prosecutors must show criminal intent, not just negligence, for insider trading convictions.

The US Securities and Exchange Commission can sue for damages in civil courts. French and most European stock market regulators must hand over all evidence of insider trading to prosecutors, who then pursue the matter in criminal court.

Soffer said the written court decision in 2002 includes factual errors, such as claiming that Soros was told something at a certain time by people who couldn't have had that information at that point.

Daubigney also made an unchallenged claim that there were no press reports in 1988 that Societe Generale was a takeover target.

Soffer showed articles from newspaper La Tribune in July 1988 and Liberation in June 1988, saying that the newly elected Socialist government was seeking investors to take stakes in recently privatised companies such as Societe Generale.

Soros has since distanced himself from day-to-day management of his now US$8 billion Soros Fund Management to focus on philanthropy.

Under French law, one set of prosecutors prepares a case against a suspect, and a different prosecutor argues the state's case in court.

During the trial, a judge reads the accusation and questions the defendant. Lawyers can interrupt to make points or to call witnesses.

In the case of an appeal, a new prosecutor represents the state. Denys Millet, the prosecutor for the appeal, wouldn't comment on what line of argument he would take.

Under French law, if he isn't convinced by the case, he can advise the judge to drop it. The final decision sits with the panel of three judges.

Should Soros lose again, he has two possibilities for appeal. He can go to the Court de Cassation, though there his lawyers can't re-argue the facts of the case, but only that the law was misinterpreted.

He could also argue to the Luxembourg-based European Court of Justice that the 14 years it took to bring the case to trial violated his right to a speedy trial.