A Sydney magistrate has thrown out an insider trading case against a former Credit Suisse banker whose friend abused his trust and "fished" for information about deals during lunchtime jogs in The Domain.
In a sensational development on Tuesday, former Credit Suisse vice-president Darren Thompson was cleared by the Local Court of 11 counts of procuring or encouraging his friend and jogging buddy Michael Hull to commit insider trading.
Mr Hull, who has already served a prison sentence for insider trading, admitted in court he cut a deal with authorities to give evidence against his friend in a bid to avoid jail.
He also admitted he kept Mr Thompson in the dark about his trading so his friend would keep telling him about deals he was working on at Credit Suisse.
Mr Hull agreed he was "fishing" for information and had "breached" his friend's trust.
Local Court Magistrate Greg Grogin ruled on Tuesday that Mr Thompson should not stand trial for insider trading.
In an embarrassing blow to the Australian Securities and Investments Commission, which investigated the case, he said Mr Hull's evidence was "critical" to the prosecution case but was "not strong".
"I have grave doubts about the credibility, and more importantly the reliability, of Mr Hull," he said.
Mr Thompson's lawyer, John Laxon, said it was "a just outcome and the end of a nightmare six years" for the former banker who had "acted ethically at all times".
Mr Hull admitted on Tuesday that he struck a deal with the Director of Public Prosecutions in 2015 to give evidence against Mr Thompson in an attempt to avoid jail. Mr Thompson had not yet been charged.
Asked if he had wanted an agreement that the Director of Public Prosecutions would not ask the court to impose a jail sentence, Mr Hull said: "That's what I would have liked."
He agreed he believed his "best chance" to avoid jail was to assist authorities. He eventually received a 50 per cent discount on his sentence for his co-operation.
The court heard the South African-born Mr Hull had a number of "pressing reasons" to avoid a jail sentence, including serious mental health issues in his family and the risk he would be deported if his sentence was greater than 12 months.
Mr Thompson and Mr Hull met while working at ANZ in Sydney and became close friends who would socialise outside work with their families and run together at lunchtime in The Domain in Sydney's CBD.
ASIC started investigating Mr Hull in 2011 and compared the timing of his trades with his jogs with Mr Thompson.
The court heard there was "no financial benefit whatsoever" to Mr Thompson from his friend's illegal trades.
"Why would Mr Thompson risk his family and his career for nothing?" his defence barrister, Murugan Thangaraj, SC, said on Tuesday.
The Crown had alleged Mr Thompson encouraged Mr Hull to "have a look" at particular stocks "knowing that he was an active investor".
But Mr Thangaraj said the evidence in the case pointed "strongly to the opposite of what the Crown contends" and it had "ignored" the evidence.
He said it was not an offence to pass inside information to a person unless tipping or procuring was also involved, and neither was involved in this case.
Mr Hull made almost $500,000 profit from his trades, a portion of which was realised.
He was jailed in June last year for a maximum of 17 months but was released in January on a good behaviour bond. He has also paid a pecuniary penalty of almost $273,000.
