Jail won't harm Gay's health: prosecutor

LAWYERS prosecuting John Gay for insider trading have criticised medical evidence aimed at keeping him from going to jail.

Gay's defence team, headed by Neil Clelland SC, have argued the cancer sufferer's health would be adversely affected by prison. 

Yesterday, in the Launceston Supreme Court, prosecutor David Staehli, SC, said a jail sentence would not impede the treatment of Gay's prostate cancer. 

Mr Staehli said prison would also have no effect on treatment for Gay's wife, Erica, who Mr Clelland has told the court is also unwell.

Mr Staehli said he didn't want to be seen as ``rallying against'' Gay's medical predicament, but that normal sentencing rules regarding health should apply. 

However, Mr Staehli said it didn't appear Justice David Porter  was considering sending Gay to jail.

In a bid keep Gay on the outside Mr Clelland said the circumstances of the crime were ``so special'' it didn't require a prison sentence.

Instead he urged Justice Porter to convict and fine his client who pleaded guilty last week. 

Mr Clelland provided details of one case, which he said was similar to Gay's, where the inside trader received a fine of $30,000. 

Gay faces a maximum fine of $220,000. 

In December 2009 the then company chairman sold 3.4 million Gunns shares within a trading window but while holding  price-sensitive information. 

In attempting to mitigate the offence, Mr Clelland said Gay retained some 12 million Gunns shares believing  their share price would increase.

This was backed up by conversations with his ANZ bank manager, he said. 

 ``The reason for the selling was the belief he was probably dying,'' he said.

Mr Clelland said this made it a ``rare if not unique'' case of insider trading because the decision to sell the shares was made before Gay had the inside information. 

He also said that the sale had not had a negative impact on Gunns' share price. 

The court heard Gay had been given ``authority'' to sell the shares by company secretary Wayne Chapman.

Mr Clelland said Gunns directors were also aware of the sale.

``There was nothing surreptitious about it,'' he said. 

However, the court heard only directors Robin Gray and Richard Millar recall Gay saying he planned to sell the shares. 

Mr Staehli said some directors were positively sure it hadn't been mentioned.  

Gay's defence team also criticised the prosecution's claim that Gay benefited by nearly $800,000 from the illegal trade. 

 The prosecution said $798,000 was the difference between what he made from the sale and what he would have made if he had sold them in February 2010 when the inside information was known to the market. 

Gay sold the shares for about 90 each but the share price dropped 20 per cent to 68.5 when the company's half-yearly report was released in late February. 

``It becomes difficult and too uncertain to make the calculations the Crown contends for,'' Mr Clelland said. 

He said Gay had actually made a loss of 23 on each share. 

However, Mr Staehli said later that Gay's loss would have been greater had he sold the shares in February. 

Justice Porter said he would consider the submissions and sentence Gay next Friday in Launceston via video link from Hobart.

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