Mick Newmarch, former chief executive of Prudential, told the Chancellor of the Exchequer, Kenneth Clarke, that the Securities and Investments Board report on pension transfers would hit the company's share price, according to a senior Treasury official.
The official was one of two Treasury civil servants giving evidence yesterday to the Stock Exchange as part of the investigation into share dealings by Mr Newmarch on 25 October, the day the SIB report was published.
The exchange has already indicated it intends to censure Mr Newmarch and the Pru's chairman, Sir Brian Corby, over the affair on the grounds that it was a breach of the code governing directors' share dealings.
Mr Newmarch made a profit of more than £200,000 by exercising and selling more than 200,000 share options in the company hours before the SIB report was published.
The Prudential argues that the report was not price-sensitive.
But the Treasury alerted the Stock Exchange to Mr Newmarch's remarks, which took place during a meeting in early October between him and the Chancellor to discuss the SIB report.
The meeting, held at Mr Newmarch's request, included David Prosser, chief executive of Legal and General. He is understood to have written to the Stock Exchange confirming Mr Newmarch's version of events. But the remark on price sensitivity apparently occurred after the formal part of the meeting had ended.
It is understood that a Treasury official took a note of the remark. The Treasury official also told the Stock Exchange that Mr Newmarch had made it clear he had seen a draft copy of the SIB report.
The Pru disputes the Treasury version of the meeting, which was requested by the company to discuss the pension transfer scandal. Mr Newmarch gave his evidence to the committee last week.
It was Mr Newmarch's share deal that caused the Treasury to spark a Stock Exchange investigation, which in turn partly led to his abrupt decision to resign.
The Stock Exchange recently advised the company that it intended to issue a reprimand because it considered the deal to be in breach of its model code for directors.
Yesterday's hearing was part of an appeal by the Pru against that decision.
If the appeal confirms the censure, the Pru can demand a further appeal. It argues that the contents of the SIB report were widely known and did not consitute price-sensitive information.
Mr Newmarch's share transaction was authorised by Sir Brian, who has taken over as acting chief executive following Mr Newmarch's departure.