The former managing director of property firm Dunloe Ewart plc has been cleared of insider dealing by a jury at the Dublin Circuit Criminal Court.

The jury of seven men and five women took about seven hours and 47 minutes, over two days, to reach its verdict on day 12 of what was the State's first insider dealing trial.

Mr Philip Byrne (44), of Trafalgar Terrace, Monkstown, had pleaded not guilty to two counts of insider dealing, contrary to the Companies Act 1990.

Mr George Birmingham SC, prosecuting, told the jury Mr Byrne sold 260,000 of his 750,000 shares in Dunloe (then Dunloe House plc) in April and May 1997, based on price-sensitive information he received as a director of Aviette.

Aviette, owned by Dublin solicitor and developer Mr Noel Smyth, was then in the process of merging with Mr Phil Monahan's Monarch Properties.

The merger was to create a company called the Cradder Group, which in turn was to be taken over by Dunloe. Despite its listing on the Irish Stock Exchange, Dunloe was small at the time, and was not a major player in the property market. The deal, which was to increase the value of Dunloe assets from £8 million (€10.2 million) to £50 million, required £25 million. Dunloe's advisers, Davy Corporate Finance, advised Mr Smyth that raising the funds "would not be easy". While a shares issue was the best way to raise funds, Davy representatives advised Mr Smyth that Dunloe share prices had to come down from the then high premium selling price of 34p to about 9p, which was closer to its net asset per share value.

Mr Birmingham told the jury Mr Byrne used this information to sell his shares before the value fell.

Mr Smyth said that when he brought Mr Byrne on board Aviette as a director in April 1997, he warned him not to regard the Aviette-Monarch negotiations as a "done deal" despite a heads of agreement signed with Mr Monahan and his partner Mr Dominick Glennane in February 1997.

Mr Smyth said his relationship with Mr Monahan could not be described as "plain sailing". Two previous attempts at a business partnership between them ended in failure.

This "unpredictable" relationship brought much uncertainty to the Dunloe deal, which had been "almost called off" several times before being finally agreed in August 1997.

Mr Smyth said Dunloe abided "to a T" with all stock market regulations. The earliest he felt the need for an announcement of price-sensitive information was in June 1997 when Dunloe asked the stock exchange to suspend its shares in order for it acquire Cradder. Dunloe share trading resumed in September 1997, after the deal was completed in August 1997.

Other key prosecution witnesses also testified they did not consider there was any price-sensitive information to announce during April-May 1997.

These witnesses included Dunloe finance director Mr Tim Kenny; deputy executive chairman Mr Stewart Harrington; chartered accountants KPMG director Mr Sean Mooney; director of Irish Takeover Panel Mr Tom Byrne; and a partner in the law firm Mason, Hayes & Curran, Mr Paul Egan.

An opposing view was offered by Mr Desmond Doran, Standard Life director responsible for investment in Europe. Mr Doran, whose advice had been sought by the Irish Stock Exchange as part the investigation, said: "If I had been in possession of that information, I would have deemed myself an insider."

Det Garda James Mullen said Mr Byrne furnished a written statement saying his Dunloe share sales were connected to the separation negotiations with his wife and subsequent purchase of a €200,000 new residence for himself. He also told Det Garda Mullen there was no profit motive in the transaction and, had the shares been retained and further entitlement taken up, it would have increased his future profits, earning him much more than the €88,000 it did in April 1997.

Mr Gallagher told the jury in his concluding address that Mr Byrne had no "malicious intent" when he sold his Dunloe shares.

He said his client made the sale after Mr Dermot Walsh, who managed his share portfolio at Davy Stockbrokers, told him at a routine quarterly meeting in April 1997 that his total portfolio - worth about £1.8 million - was overweight with Dunloe shares.

Mr Byrne then instructed Mr Walsh, on April 28th, 1997 to sell 250,000 of his Dunloe shares and some of his Smurfit shares. Due to a dealer error, 260,000 shares were sold instead of 250,000.