The former managing director of Dunloe Ewart plc had insider information at the time he sold 260,000 Dunloe shares, an investment expert told an insider dealing trial yesterday.
Mr Desmond Doran, director responsible for investment in Europe for Standard Life Investment, was giving evidence in the trial of Mr Philip Byrne (44), of Trafalgar Terrace, Monkstown, Co Dublin. Mr Byrne has pleaded not guilty to two charges of insider dealing in relation to the sale of shares between April 27th, 1997 and May 9th, 1997.
The trial heard that in June 1998, Mr Kevin McHugh of the Stock Exchange asked Mr Doran if he would give advice to the exchange in relation to the share sale. Mr Doran agreed and was given the details of the case.
At the time of the sale Mr Byrne was aware that a heads of agreement had been signed by Mr Noel Smyth, Mr Phil Monahan and Mr Dominick Glennane, relating to the merging of properties and companies which would then be absorbed into Dunloe House (now Dunloe Ewart). Mr Doran said he was informed that Mr Byrne was of the view that, because the heads of agreement was not legally binding, and the deal it described might never come off, the information he was in possession of was not information likely to lead to a change in the Dunloe share price.
Mr Doran said that from his point of view he would presume that people who signed a heads of agreement wanted the deal described to go through. "Once you feel that there is a possibility or a likelihood of a deal going through, then you are an insider.
"If I had been in possession of that information I would have deemed myself to be an insider."
He told Mr George Birmingham SC, for the prosecution, that the proposed deal would result in a significant increase in the size of Dunloe - and that in itself would have been a price-sensitive event.
He also said the issuing of shares to raise finance, which was needed as part of the deal, would be likely to affect the share price. He thought a fall in price of 10p, from the then price of around 36p, was reasonable to expect.
Mr Doran was told there had been evidence that many of the people involved felt the deal might have gone "off the rails" at any time. He said any deal could go off the rails. It did not matter what happened later. If you were in possession of information not available to other persons at the time you made a deal, "then you have an unfair advantage".
If the information available to Mr Byrne on April 27th 1997 had been leaked to the newspapers, institutions would have decided not to buy Dunloe shares until after the share issue associated with the proposed deal, Mr Doran said.
Mr Doran said he was a former head of Irish equities and of overall Irish business with Standard Life Investments. At one stage the company held 4 per cent of all holdings on the Irish Stock Exchange. He was a former chairman of the Irish Association of Investment Managers
.Questioned by Mr Paul Gallagher SC, for Mr Byrne, Mr Doran said the documentation sent to him by Mr McHugh for consideration did not include a February 1997 press release from Dunloe.
That statement had confirmed that the company was involved in looking at a number of unspecified deals which, if they went ahead, might require substantial finance.
Mr Gallagher said a recent Coyle Hamilton report had listed Standard Life as 15th in a list of 15 performers over the past five years. "Does that reflect Standard Life's approach in purchasing shares?" Mr Doran said he was giving evidence in a personal capacity. Mr Gallagher added that a recent advertisement by Eagle Star had rated Standard Life fifth out of five in a review of performances over the past 10 years.
Mr Doran told Mr Gallagher he was not aware which properties listed in the heads of agreement had ended up in the Dunloe deal.
A person could have known something about a company on September 10th 2001 which caused them to trade and then when the September 11th attack took place it would transpire they'd lost money.
