Crispin Odey, one of Britain's most high-profile hedge fund managers, was acquitted of indecently assaulting a young, female banker in 1998 after a three-day London trial.
Judge Nicholas Rimmer told Westminster Magistrates' Court on Thursday that there had been a "catalogue of inconsistencies" in the case and he could not dismiss the possibility that 62-year-old Odey only verbally propositioned the woman.
"I acquit you and you will leave this courthouse with your good character intact," Rimmer said.
He said he had found Odey's evidence credible but that some of the evidence of the woman, who cannot be named for legal reasons, "would not be inconsistent with a vivid imagination".
Odey, a multi-millionaire and political donor, earlier told the trial that the charge, that he groped the woman in his house more than 20 years ago, was a "horrible slur". He has denied any physicalcontact with her.
A spokesman for Odey Asset Management, the firm he founded, said: "Crispin has always maintained his innocence, and we are pleased that he has been found not guilty."
Testifying earlier on Thursday, he said he invited the "attractive and intelligent" woman to his home in West London for a social meeting and verbally propositioned her.
But he alleged she had been appalled, he had apologised and she walked out in silence.
Asked by the prosecutor whether he would have responded if she had welcomed his advances, he told the court: "I might have. I don't know. That is to my shame."
The woman alleged that she went to Odey's house for a business meeting because he was a prominent client of her former investment bank employer.
But once there, he changed into a dressing gown and "lunged at her", putting a hand up her skirt and on her breast. She alleged she was shocked and scared, wrestled herself free and left.
