Investment bank Citi has won a battle against insider trading allegations made by the corporate watchdog.
The Federal Court of Australia dismissed charges by ASIC, but regulator chairman Tony D'Aloisio said he was not disappointed.
He said the action had served to make important clarifications of insider trading law.
"Strong enforcement action against insider trading reinforces market integrity and confidence," he said
"ASIC will take action where it considers that insider trading may have occurred."
D'Aloisio said he did not know how much ASIC would have to shell out to in court costs.
ASIC alleged Citi Global Markets Australia used inside knowledge to trade shares in Patrick Corporation just before Patrick's rival, Toll Holdings, made a hostile takeover bid.
Citi acted as a consultant to Toll at the time of the alleged trades.
Like many investment banks, Citi operates a Chinese Walls system for the treatment of sensitive information.
ASIC alleges the Chinese Wall fell down in August last year when a Citi trader from the public side, bought a million shares in Patrick Corporation.
"The second important aspect of this case is the clarification on when the law will imply the existence of a fiduciary duty," D'Aloisio said.
"Where ASIC feels that clarification of the law by a court is important, it will as a matter of policy, commence proceedings."
The court also ruled Citi did not contravene the conflict of interest provisions of the Corporations Act.
ASIC has successfully prosecuted eight insider trading actions since July 2004.
