Former Gunns chief John Gay asks for insider proceeds case to be scrapped

The former Gunns timber company chairman's counsel told the court on Monday that Mr Gay probably lost well in excess of $36,586 by making the trade for which he was convicted.

"Any additional measure of punishment is in our view misplaced," his counsel, Neil Clelland, QC, said. "There was no benefit."

Mr Gay was convicted and fined $50,000 in 2012 over the December 2009 sale of around $3 million worth of shares shares, when he held price sensitive information contained in a monthly management report.

The court heard that following Mr Gay's sale of the shares, when the information became public in February 2010, Gunns share price fell from 87.5¢ to 68.5¢.

The Commonwealth Director of Public Prosecutions alleged Mr Gay avoided a loss of around $600,000 by making the sale.

The action for proceeds of crime brought by the DPP followed widespread criticism of the original penalty.

Australian Securities and Investment Commission chairman Greg Medcraft told a Senate Committee "the whole country" was disappointed with the outcome.

The DPP earlier this year failed in an attempt to set a precedent by penalising Mr Gay the full $3 million gross proceeds of the sale, with judge Stephen Estcourt describing that as "a draconian outcome".

Counsel for the DPP,  David Staehli, SC, told Mr Estcourt it was true that Mr Gay suffered a capital loss in the sale of the shares compared to their purchase price.

"The offence is the disposal of shares with inside information," Mr Staehli said.

"Our case is that he obtained a higher price than he would have obtained in February.

"The figure is around $600,000 to $700,000…representing the difference between people who had the information and those who didn't."

Mr Estcourt said he would rule on Tuesday on Mr Gay's claim against any further penalty before proceeding further with the case, and indicating that if he did, he was likely to order mediation.