The man who broke the Bank of England

George Soros is one of the most successful investors of all time. The 81-year old financier and notable philanthropist, is particularly known as "the Man Who Broke the Bank of England" after he made a reported $1 billion during the 1992 Black Wednesday UK currency crises. He had correctly speculated that the UK government would have to devalue the pound. Last year, Forbes listed Soros as 35th richest billionaire in the world and the 14th richest person in the United States, with a net worth of $14.5 billion. Climbing the Ladder Soros emigrated to England in 1947 as an impoverished student and attended the London School of Economics, where he earned a Bachelor's Degree in Philosophy. He then secured an entry-level position with London merchant bank Singer & Friedlander. In 1956, Soros moved to New York City, where he worked as an arbitrage trader with F.M Mayer as an analyst. It was at this time when he developed his own application of the social theory of "reflexivity", a set of ideas that seeks to explain how a feedback mechanism can identify how participants in a certain market value the assets on that particular market. Between 1963 and 1973, he then worked as a Vice President for Arnhold and S Bleichroder, until investment regulations restricted his ability to run the funds as he wished, forcing him to resign and set up his own private investment hedge fund Quantum Fund with $12 million from investors.

In 2007 alone, the Quantum Fund returned almost 32%, netting Soros $2.9 billion. The fund currently has assets of approximately $27 billion.

Soros is now the Chairman of Soros Fund Management and his two sons are managing the firm's day-to-day operations.

Soros to end Hedge-Fund Career

In July 2011, Soros announced that he is ending his career as hedge-fund manager that has spanned for more than four decades; closing the Quantum hedge fund to outside investment and instead running the hedge fund as an investment vehicle for his family's fortune and focusing on his philanthropic work.

He is thus expected to hand back about $1 billion to outside investors in his $25.5 billion firm by the end of the year. Upon the repayment, his firm will focus on managing assets solely for Soros and his family, according to a letter that was sent to investors.

Philanthropy

The move therefore marked Soros's transformation from a speculator to a philanthropist statesman. In the last 30 years, he has given away more than $8 billion to promote democracy, free speech, improve education and fight poverty around the world.

He founded the Open Society foundation, aimed at shaping public policy by promoting democratic governance, human rights and economic, legal and social reform.

His enormous success is now also devoted to encouraging transitional and emerging nations to become "open societies" by tolerating new ideas and different modes of thinking and behaviour.

Controversy

In 2009, Soros publically said that he believes that marijuana is less addictive and that he himself has not used for years. A year later, he donated $1 million to support California's Proposition 19 that would have legalised various marijuana-related activities.

The Project on Death in America, active from 2001 to 2003, was also one of the Open Society Institute's projects, which sought to "understand and transform the culture and experience of dying and bereavement". In 1994, the controversial philanthropist delivered a speech in which he reported that he had offered to help his mother to commit suicide.

Soros is also known to donating about $25 million to defeat President George W. Bush's re-election in 2004. In an interview with the Washington Post, he said that removing Bush from office was the "central focus of my life" and a "matter of life and death". He also claimed that he would have sacrificed his entire fortune to defeat President Bush "if someone guaranteed it".

"The United States sets the agenda for the world. And the rest of the world has to respond to that agenda. By declaring a 'war on terror' after September 11, we set the wrong agenda for the world...when you wage war, you inevitably create innocent victims", he stated.

Criticism

According to Mahathir bin Mohamed, Prime Minister of Malaysia at the time, as the hedge fund chief of Quantum Soros has been partially responsible for the economic crash in 1997 of the East Asian markets, when the Thai currency relinquished its peg to the US dollar. In the three years leading to the crash, Soros invested in short-term speculative investment in East Asian stock markets and real estate, then divested with "indecent haste" at the first signs of currency devaluation.

Naturally, Soros responded, claiming that Mahathir was using him "as a scapegoat for his own mistakes" and that Mahathir "is a menace to his own country".

New York Times columnist Paul Krugman also has expressed his criticism on Soros' effect on financial markets. "There are investors who not only move money in anticipation of a currency crisis but actually do their best to trigger that crisis for fun and profit".

Currency Speculation

On September 16, 1992, today known as Black Wednesday, Soros's fund sold short more than $10 billion worth of British pounds, profiting from the UK government's reluctance to either raise its interest rates to levels comparable to those of other European Exchange Rate Mechanism countries, or to float its currency.

The UK had then withdrawn from the European Exchange Rate Mechanism, thus devaluing the pound sterling and earning Soros an estimated $1.1 billion; hence why he was dubbed "the man who broke the Bank of England".

"I'm only rich because I know when I'm wrong...I basically have survived by recognising my mistakes. Whenever you are wrong, you have to fight".