The former managing director of Dunloe Ewart, Mr Philip Byrne, told an Irish Stock Exchange insider dealing investigation that there was nothing "malicious" about his sale of Dunloe House plc shares in 1997.

Ms Roisin McHale, who conducted the investigation for the stock exchange, told the Circuit Criminal Court that, in January 1998, Mr Byrne told her the sale of the shares was "unfortunate rather than deliberate". He also told her he had "no malicious intent" when making the sale.

She was giving evidence on the second day of the trial of Mr Byrne (44), of Trafalgar Terrace, Monkstown, Co Dublin, who has been charged with two counts of insider dealing in relation to the sale of 260,000 Dunloe shares between April 27th, 1997 and May 9th, 1997.

The prosecution alleges that, at the time of the sale, Mr Byrne was in possession of price-sensitive information, namely a proposal that Mr Noel Smyth, Mr Phil Monahan and Mr Dominick Glennane would merge various property interests into a new company which would then be the subject of a reverse takeover by Dunloe House (as Dunloe Ewart was then called). Mr Byrne has pleaded not guilty to both charges.

Ms McHale said she met Mr Tim Kenny, the financial director of Dunloe, in the company's offices on January 7th, 1998. Mr Byrne joined the meeting and said he wanted to give his view of the matter. Ms McHale told Mr George Birmingham SC, for the prosecution, that she was told by Mr Byrne that, at the time he sold the shares, he had no knowledge of any "firm deal" being on the table.

Mr Byrne said he had discussed his personal shares portfolio with Mr Dermot Walsh of Davy Stockbrokers and it was decided he was over-exposed in Dunloe shares, Ms McHale said. It was "loosely" agreed that shares would be sold, but that the timing would be left to Mr Walsh.

Ms McHale said Mr Byrne told her that when he was later preparing a document relating to the deal proposed for Dunloe, he told Mr Kenny he had sold some Dunloe shares. "Mr Kenny had become annoyed with him and berated him and said it was poor timing." The information was put in the document being prepared for the proposed deal.

Ms McHale said that, at a meeting in the Stock Exchange on May 6th, 1998, Mr Kenny said the proposed deal involving Mr Monahan was far from certain at the time the shares were sold because of difficulties to do with personality clashes, valuations, tax issues and legal issues.

Mr Byrne, who was at the meeting, said he was aware at the time he sold his shares that Mr Smyth, Mr Monahan and Mr Glennane had signed a heads of agreement covering the proposed deal. The heads of agreement involved property valued at €25.14 million (£19.8 million) and debts of €12.57 million.

Ms McHale said Mr Byrne said the sale of the shares was an "unfortunate mistake" on his part.

The court heard that in June 1997 trading in Dunloe shares was suspended because of the proposed deal. The shares were trading at 43 cents. When trading resumed in September 1997, following the deal, the shares sold for 29 cents