(Repeats to add new Pirelli code )
By Michael Shields
ZURICH, Sept 25 (Reuters) - A Zurich court acquitted Swiss financier Martin Ebner of insider trading charges on Thursday, ruling that the prosecution had failed to prove its case against the former high-flying corporate raider.
Ebner, 58, accepted the verdict calmly as he stood in the dock before a three-judge district court panel that fully vindicated him and even suggested the prosecution should have dropped the case without bringing him to trial.
"There is a saying that being right and getting justice are two different things," a "very relieved" Ebner told reporters on the courthouse steps.
"There was always uncertainty. I always knew personally that I did nothing wrong, but the court had to believe me and this question was open until now."
Legal experts had doubted the prosecution's case was strong enough to convict the bow-tied banker under Switzerland's relatively toothless insider trading law that has triggered only four convictions in the 15 years it has been on the books.
The case revolved around the 1998 sale of shares that Ebner's BZ Group held in Italian tyre and cable group Pirelli's Swiss holding company SIP.
Prosecutors alleged Ebner began to sell the stake after it became clear from his meetings with Pirelli managers that a buyout of SIP was coming, but at a discount to the market price.
The court accepted Ebner's assertion that he authorised the sales to help take the steam out of a rally in SIP and underlying Pirelli stock on unfounded rumours that BZ would make a full takeover offer for the Italian industrial group.
Only by pushing the price down toward a level that he thought valued SIP fairly could he ensure that efforts to simplify Pirelli's byzantine structure and thus unlock value for investors did not fall apart, he had testified on Wednesday.
EMPIRE CRUMBLED
Prosecutors had demanded a seven-month suspended sentence and a fine for Ebner, whose shareholder activism once made him the scourge of the Swiss business establishment but whose financial empire crumbled in the global stock market rout.
His personal wealth -- worth some five billion Swiss francs ($3.7 billion) at the height of the 1990s market boom -- has since dwindled to under 100 million, he told the court, acknowledging he had misjudged the stock market.
Ebner was forced to sell many of BZ's stakes in blue-chip companies to raise desparately needed cash it owed creditors.
This dented Ebner's reputation as a shrewd investor who helped engineer giant transactions, such as the merger that created giant bank UBS, by building up hefty holdings and then demanding managers generate more value for investors.
The trial had been seen as a test case with one of the main issues to be decided being whether a major shareholder qualifies as an insider. Unlike in the surrounding European Union, big shareholders are not listed as insiders under Swiss law.
Ebner, who told the judges he had been badly pained by the case, said he did not think prosecutors were out to get him, but had used him to try to put more bite into the insider law.
Prosecutor Marc Jean-Richard-dit-Bressel "saw a platform for himself...to help create a more modern insider trading law. But the costs that he took into account were my costs and that does not justify the procedure," Ebner told reporters.
The prosecutor said he still thought it had been proper to try Ebner and he would consider whether to file an appeal.