FORMER Gunns chairman John Gay has been remanded on bail until the beginning of his trial on insider trading charges.
Mr Gay is scheduled to front the Tasmanian Supreme Court in Launceston from August 5 after preliminary proceedings hearings were concluded on Monday.
He has pleaded not guilty to two charges of insider trading in which it is alleged he sold 3.4 million shares, worth around $3 million, with knowledge about Gunns' performance that was not generally available to the market.
Defence lawyer Neil Clelland SC cross-examined corporate valuer Wayne Lonergan, who prepared two reports for the Australian Securities and Investment Commission on how a "hypothetical investor" would behave with information known only to the company's board.
Mr Lonergan told the Launceston magistrates Court such an investor would have been "seriously disturbed" by information the board held on the company's performance in October and November 2009.
"The company had been historically profitable," Mr Lonergan said.
"What they're now looking at ... is a very significant deterioration.
"That's a very serious situation."
Mr Lonergan said stockbrokers were forecasting a modest downturn in profits, while Gunns management was expecting a decline of more than 100 per cent.
Gunns reported a 98 per cent deterioration in half yearly earnings in February 2010 and its share price plummeted.
Mr Lonergan said stockbrokers had described the unexpected result as "a shocker".
The court had previously been told Mr Gay had disposed of the shares to organise his affairs after being diagnosed with prostate cancer.
He kept another eight million shares in the company, which collapsed into administration last September.
Mr Gay's trial is expected to run for two to three weeks.
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