A UK expert on stock market regulation has told the High Court that information available in January 2000 to DCC chief executive Mr Jim Flavin on the trading performance of Fyffes would, if known to the stock market, have led to a sharp fall in the Fyffes share price, writes Mary Carolan

He said the information was "more valuable" to Mr Flavin, an "assiduous director" who knew the Fyffes business "backwards".

Mr Scott J Dobbie, said the information showed a significant shortfall in Fyffes's trading performance for the first quarter of the fiscal year 2000 and cast serious doubt on Fyffes's ability to meet its half-year targets for 2000. In his view, had the market been aware of that information, it would have revised the Fyffes share price downwards by at least 5 per cent.

Mr Dobbie - who was a prosecution witness in the 1993 UK case in which former Guinness chief executive Mr Ernest Saunders and others were convicted of conspiracy to drive up the price of Guinness shares during a takeover - said he did not accept arguments by Mr Flavin that there was sufficient information generally available in the market in early 2000 about banana prices and exchange rates to deduce that Fyffes's trading operations would be much less profitable than in previous years.

If the information in Mr Flavin's possession on January 25th had been disclosed to the market on February 3rd, 2000, the date of the first of three controversial sales of the DCC stake in Fyffes, it would have had "a profound effect" on the market, he said.

Mr Dobbie was giving evidence on the 37th day of proceedings in which Fyffes alleges "ìnsider dealing" in relation to the €106 million sale of the DCC stake in Fyffes on February 3rd, 8th and 14th, 2000.

The action is against DCC, Mr Flavin and two DCC subsidiaries, all of which deny the claims, deny possession of price-sensitive information at the time of the share sales, and plead the sales were properly organised by one of the defendant subsidiaries, Lotus Green Ltd.

Yesterday, the court heard that Mr Dobbie, an expert witness for Fyffes, had more than 30 years' experience in the securities industry, initially as a stockbroker and later in the area of regulating corporate communication. He is currently a member of the UK Financial Services Authority's decisions committee.

In his report, Mr Dobbie concluded that two documents available to Mr Flavin in January 2000 contained price-sensitive information which, if known to the market, would have had a material effect on Fyffes's share price.

He said he would also argue that the criterion of materiality of importance of the information is, for a director of a company, very low - if there was any doubt, "do not deal".

He noted Mr Flavin had alleged that Fyffes was obliged to issue a profit warning when it became clear that trading in the first quarter of fiscal year 2000 (beginning November 1999) was falling below budget. Mr Dobbie said he believed that a statement by Fyffes on December 14th, 1999, predicting that 2000 would be a year of further growth was general and not specific in regard to numbers or targets and that a trading statement before the company's annual general meeting on March 20th (when it did issue a profit warning) was "not strictly necessary".

Cross-examined by Mr Michael Ashe SC, for the defence, Mr Dobbie agreed the Fyffes share price began to go into retreat after February 18th, 2000. (The court has heard the price peaked at about €4 at that time.) Mr Dobbie said he was not at all surprised the price fell following the sale of the DCC stake.

This major placing by Davy and Goodbody stockbrokers took a lot of buyers in one go and, in his view, was the main factor in the share price falling after that date. He agreed the market was fairly euphoric at that time about dotcom shares.

He also agreed the March 20th profit warning by Fyffes was given in a declining market. He added it was also a market "saturated by the efforts of Davy and Goodbody's".

He agreed that the market was broadly aware of a depressed performance in banana trading for a large part of 1999 and would be broadly aware Fyffes bought its bananas with dollars. However, he believed the market failed to make a sufficiently accurate connection between those factors and their impact on Fyffes. Because of this legal case, the market would be much more aware now of the precise makeup of Fyffes's figures, he added.

In his view, the market would have taken comfort from the December 14th, 1999 announcement of Fyffes's preliminary results, which were better than the market had anticipated, and would have built a dotcom euphoria on that core. (The December 14th statement also included an announcement about Fyffes's new ecommerce business, worldoffruit.com). He said the real jump in the Fyffes stock began in January 2000.

He said information available to Mr Flavin on January 25th, 2000, (a document outlining the December 1999 results and a trading forecast for January 2000) was in itself price-sensitive. He believed the market would have revised its Fyffes forecasts downwards had it seen that document. To a man of Mr Flavin's knowledge, it was more valuable because he knew more about the Fyffes business. If the market knew this information on February 3rd, 2000, the Fyffes stock price rise would not have continued.

Mr Dobbie said he was not using the March 20th profit warning (following which the Fyffes share price fell 25 per cent in two days) as a "proxy" to determine the price-sensitivity of the documents available to Mr Flavin. The documents were price-sensitive. The move downwards of the Fyffes price on March 20th reinforced his view that the information of January 2000 was price-sensitive.

He agreed there were differences between the data released to the market in the profit warning in March and the information available in January. But, he thought the "broad trend" was the same and the market conditions were not sufficiently different to alter the situation.

The case resumes before Ms Justice Laffoy on Tuesday.