A French court has found International Monetary Fund chief Christine Lagarde guilty of negligence but did not hand down any punishment.
As French finance minister in 2008, she approved an award of €404m ($429m; £340m) to businessman Bernard Tapie for the disputed sale of a firm.
Ms Lagarde, who always denied wrongdoing, was not present in court, having left France for Washington.
The IMF board will meet on Monday to consider the latest developments.
Meanwhile, the French government said it still had confidence in the IMF chief.
On Friday, Ms Lagarde told the trial she had always acted in good faith and the suspicion she had lived under for the past five years had been an “ordeal”.
Cases at the Court of Justice of the Republic (CJR) may not be retried but can be appealed against on grounds of procedural errors.
Ms Lagarde’s lawyer said his team would consider appealing, Reuters news agency reports.
‘Complicated and strange’
Ms Lagarde, 60, was tried on charges of “negligence by a person in position of public authority”.
Accused of allowing the misuse of public funds, rather than actual corruption, she could potentially have been sentenced to a year in prison and a fine of €15,000 but escaped a sentence and emerges from the trial without a criminal record.
Explaining the verdict, which took many by surprise, Judge Martine Ract Madoux was quoted by Reuters as saying: “The context of the global financial crisis in which Madame Lagarde found herself in should be taken into account.”
She also cited Ms Lagarde’s good reputation and international standing as reasons.
What will the IMF do? Alex Ritson, BBC Business
The question Christine Lagarde’s employers at the IMF will be asking themselves as they consider her future is whether or not this case was politically motivated. Up to now, they’ve stood firmly behind her.
The IMF’s board will need to decide whether the guilty verdict will damage the organisation more if she stays or if she goes. Legal cases involving her two immediate predecessors have brought unwelcome publicity.
She took office five years ago when the previous IMF head, Dominique Strauss-Kahn resigned. He was arrested as he was boarding an aircraft in New York over a suspected sexual assault, although charges were later dropped.
Mr Strauss-Kahn’s predecessor, Rodrigo Rato, is currently standing trial on charges of misusing funds when he was boss of a Spanish bank. None of this is the IMF’s fault – but the cases haven’t done much for its credibility.
The CJR is composed mostly of politicians rather than judges, and handles allegations of crimes committed by cabinet ministers in office.
CJR trials are rare but in a similar judgment in 1999, it found another French politician, Edmond Herve, guilty of negligence over a contaminated blood case but did not punish him.
The earlier decision rested on a legal article (in French) which allows courts to deliver a guilty verdict but withhold actual punishment.
A lawyer for Ms Lagarde, Christopher Baker, told the Associated Press: “The result of this last five years is nothing, which leaves us in kind of a complicated and strange situation.”
Ms Lagarde’s case originates in the early 1990s, when Mr Tapie was a majority shareholder in sports goods company Adidas.
After launching a political career and becoming a cabinet minister in Francois Mitterrand’s Socialist government in 1992, Mr Tapie had to sell the company.
In 1993, he sued Credit Lyonnais, a state-owned bank that handled the sale, alleging that the bank had defrauded him by deliberately undervaluing the firm.
By 2007, the long-running case was referred to binding arbitration by Ms Lagarde, who at that time was finance minister under conservative President Nicolas Sarkozy.
A three-member panel awarded the compensation a year later, causing a public outcry.
Last year, after eight more years of legal wrangling, a French court ruled that Mr Tapie had not been entitled to compensation and should repay the €404m.
In its verdict, the CJR said Ms Lagarde should have asked her aides and others for more information about the “shocking arbitration award” that included damages of €45m.
Lagarde-Tapie: A French saga
1993: Credit Lyonnais bank handles sale of Adidas to enable Mr Tapie to pursue ministerial career under then Socialist President Francois Mitterrand
1993-2007: Mr Tapie claims Credit Lyonnais undervalued Adidas and that he was cheated; lengthy court battle ensues
1994: Bernard Tapie’s highly indebted group collapses and is wound up by Credit Lyonnais
2007: Mr Tapie supports conservative Nicolas Sarkozy in presidential election. Finance Minister Christine Lagarde intervenes in Tapie case to order binding arbitration
2008: Special judicial panel rules Mr Tapie should receive damages of €404m; Ms Lagarde decides not to challenge ruling
2011: Several months after Ms Lagarde is appointed head of the IMF, public prosecutor recommends investigation into her decision to order arbitration
2015: Appeals court orders Mr Tapie to pay back €404m with interest
2016: Ms Lagarde found guilty of negligence but spared prison sentence and criminal record