FORMER Gunns chairman John Gay looks less likely to see the inside of a jail cell after the prosecution stopped short of pushing for an actual prison term.
In Launceston's Supreme Court Crown prosecutor David Staehli, SC, said imprisonment was the ``only appropriate sentence'' to Gay's insider trading.
But he added ``a sentence of imprisonment without full-time custody may be justified''.
Mr Staehli did not call for a fine, which is capped at $220,000 for insider trading committed before 2012.
Gay pleaded guilty last week to selling 3.4 million shares in December 2009, while privy to unreleased Gunns financial information he ought to have known was price sensitive.
Defence counsel Neil Clelland, SC, said Gay's prostate cancer would be severely affected by prison for a crime he called ``an exception in the catalogue of insider trading cases''.
The court heard Gay wanted to sell four million of his 15 million Gunns shares to pay off a $2.1 million house mortgage and other debt.
He apparently made the decision after learning he had cancer in 2008, telling his accountant ``he did not want to leave a lot of debt to those who survived him''.
The information the case hinges on was a management report given to Gunns' directors in a November 2009 board meeting.
It showed Gunns financial figures were on the wane, including a dip in profit before tax of more than 200 per cent, while revenue was down jl30 per cent.
According to Crown witness and corporate finance expert Wayne Lonergan, the figures showed Gunns was facing a ``double whammy'' of falling profits and increased risk.
On December 2 Gay instructed his stock broker to sell three million shares over two days.
On December 4 he told the broker to sell another 500,000 shares, of which about 400,000 were sold.
On December 8 he cancelled the order to sell the remaining shares having raised enough money.
The sale placed Gay in compliance with Gunns company policy, which allows directors to sell shares within a month after an annual general meeting.
The 2009 Gunns AGM was held on November 11.
Mr Staehli said Gay benefited to the tune of nearly $800,000 by selling the shares when he did.
When Gay's inside information was released to the market in February 2010 in a half-yearly financial report Gunns' share price dropped from 87.5 to 68.5 in one day.
Mr Clelland said the defence took issue with the amount his client was said to have benefited by and Mr Lonergan's analysis.
In his sentencing submission before Justice David Porter, he said Gay's illness was important background to his offending.
He said Gay decided to sell shares when falling ill - more than a year before he made the insider trade.
This made it an unusual case because insider trading was usually motivated by the receipt of price sensitive information, he said.
Mr Clelland said it was not done surreptitiously as Mr Gay had told his accountant, banker, the Gunns board and company secretary he was going to sell shares.
A public notice was also issued to the Australian Securities Exchange regarding a change in director's holdings.
``This is telling the world you are selling Gunns shares,'' he said.
In a medical report tendered to the court Gay's urologist said the defendant's hormone therapy, which occurred around the time of the sale, may have led to ``decreased mental acuity''.
``[Which] may have contributed to his poor judgment,'' the statement said.
Mr Clelland also read out character references by employees, associates and admirers.
Sentencing submissions continue today.