The former secretary general of the Department of Finance has said he was made aware in July 2008 that Anglo Irish Bank had lent money to ten individuals to buy shares in the bank.
The transaction is at the centre of criminal charges faced by the bank's former chairman, Seán FitzPatrick, and two former directors of the bank, Patrick Whelan and William McAteer.
They deny giving illegal loans to 16 people to buy shares in the bank.
Kevin Cardiff, who was second secretary at the Department of Finance in 2008, was asked about his notes of a meeting on 23 July 2008.
This was a meeting of the domestic standing group - made up of representatives of the Central Bank, Department of Finance and the Financial Regulator.
Mr Cardiff's notes referred to "high net worth individuals" from Ireland and the US, and said there was "some lending to them. Likely to be short term".
He said he had had a phone call from Con Horan the official from the Financial Regulator's office in charge of banks beforehand and he said the terms of the conversation were very similar.
He agreed that he had been told by Mr Horan that there was some lending to the individuals and that it was expected to be short term.
Earlier, Mr Horan told the court that he only became aware there had been lending to the Maple Ten investors in January 2009.
He said he had been told by the bank's former chief executive David Drumm that there was a possibility of some very short-term lending to the Maple Ten, if any of them had a cash flow problem, but that he was not told there was any actual lending.
In his short evidence, Mr Cardiff told the court the Department of Finance was concerned about the large stake Mr Quinn had built up in Anglo through Contracts for Difference because it could undermine the bank and the whole Irish banking sector.
Mr Cardiff said they did not like to see a single individual have such a large holding in a bank, particularly this individual as he was such a large borrower from the bank as well.
He said Mr Quinn had also been using funds from his insurance company to finance his position and this appeared to be an inappropriate thing to do.
He said you would not want someone in breach of insurance best practice to have control of a bank.
Horan denies 'cheerleading' for Anglo deal
The former official in the Financial Regulator's office responsible for banks earlier said he cannot recall putting the former finance director of Anglo Irish Bank under extreme pressure to complete an agreement to unwind Seán Quinn's stake in the bank.
Lawyers continued to cross-examine Con Horan earlier, who was prudential director at the Irish Financial Services Regulatory Authority.
Mr Horan said the regulator was very positively disposed towards the proposed agreement between the Quinns and Anglo in March 2008, and the subsequent deal in July 2008, which is at the centre of the trial.
He said he could not remember if he had taken a contemporaneous note of conversations he had with the bank's former chief executive David Drumm in the run-up to the transaction in July 2008.
Mr Horan was being cross-examined by lawyers for Mr FitzPatrick about a proposed agreement between the Quinn Group and Anglo Irish Bank in March 2008 to unwind Mr Quinn's position in the bank.
Mr Quinn had built up a 29% stake in the bank by gambling on the bank's share price through Contracts for Difference (CDF).
The share price was falling and Mr Quinn had to borrow hundreds of millions of euro to pay his CFD providers.
There were concerns about the stability of Quinn Insurance, Anglo Irish Bank and the entire Irish financial system as a result.
At the end of March, the Quinns and the bank reached an agreement about how to unwind Mr Quinn's stake.
The agreement failed because investors could not be found to buy a portion of the shares.
Mr Horan denied that he had had a "hands-on" role in the agreement, but said the regulator was very close to the transaction.
He said he did not recall putting the former finance director of the bank, Mr McAteer, under extreme pressure to complete the deal.
He said he did not recall a conversation on 2 April 2008, in which Mr McAteer told him the bank had been advised it was not the right time to try to sell the shares.
Mr Horan said he did not remember the exchange, but he said the regulator was concerned about all parties and was engaging actively in an effort to find a solution.
He said the regulator was very positively disposed towards the transaction in March and in July 2008.
Senior Counsel Michael O'Higgins put it to Mr Horan that the regulator was cheerleading for the deal on both occasions.
Mr Horan said he would not characterise it as cheerleading. He said the regulator was glad the threat to stability was being removed.
Asked to put it into simple English, he said he was positively disposed towards the development and anxious that it would happen.
Mr O'Higgins asked Mr Horan if people get a dictionary when they go to work in financial services so they can use bland phrases.
Mr Horan said his language was not as colourful as Mr O'Higgins's, but there would not be a huge difference between them, depending on Mr O'Higgins's definition of cheerleading.
Mr Horan was questioned about his records of telephone conversations with various people during 2008.
He was asked why there was no contemporaneous record of conversations with Mr Drumm and Matt Moran of Anglo in July 2008, in the days before the transaction at the centre of this case took place.
Mr Horan said he could not recall if he had taken notes.
But he said he had put the three conversations into a note for the regulatory authority later in July and it was possible he had not maintained his "scribbles" on paper after he had typed up that note.