A former forestry company boss convicted of insider trading should be penalised only the profit he stood to lose on a shareholding, not the gross sum which he benefited, a court has ruled.
The Commonwealth Director of Public Prosecutions launched proceeds-of-crime action in the Tasmanian Supreme Court to seize $3.1 million from former Gunns chief, John Gay.
That was the amount he made in early February 2009 when he sold company shares using information not available to the market.
But Justice Stephen Estcourt on Monday rejected the DPP's bid, saying the claim included a "notional $2.5 million" which he still would have made after the company information became public.
"It follows that I reject the (DPP's) submission that the amount of the pecuniary penalty that I must order is the total amount of ($3.1 million) being the sum for which the shares were sold," the judge wrote in his published findings.
Justice Estcourt noted that if Gay had sold his shares "lawfully" some two weeks later he would have disposed of them for about $2.5 million.
It is implied therefore that the Commonwealth should instead be looking to penalise Gay for the approximate $600,000 difference.
"It would plainly involve unjustifiable double punishment if the Act were construed so as to expose the defendant to a pecuniary penalty equal to the gross proceeds of the sale of the shares," the judge found.
Justice Estcourt found there is scope for further argument and evidence of a revised pecuniary penalty at a future date.
Gay was fined $50,000 when he pleaded guilty to insider trading.
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