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John Kizon. Picture: The West Australian/Bill Hatto

Colourful identity John Kizon’s insider trading trial has been told that pornography company boss Malcolm Day was a spruiker seemingly willing to use any means to attract investors.

Defence lawyer Martin Bennett told a District Court jury today that Mr Day’s company AdultShop.com was under pressure from unhappy big shareholders in 2002 and told lies to bolster the share price.

This included Mr Day making up false revenue forecasts with the help of a lieutenant who was secretly selling shares, Mr Bennett said.

The lawyer made the allegations while outlining the defence case of South Perth-based share trader Nigel Mansfield to five charges that he conspired with businessman Mr Kizon to insider trade AdultShop shares.

Mr Kizon and Mr Mansfield have pleaded not guilty.

Prosecutors and defence lawyers have accused Mr Day of conveying false information to the alleged insider traders, including about financial projections for AdultShop and Kerry Packer buying a 4.9 per cent stake in the company.

Insider trading is the legal nickname for the offence of buying shares with information that is not generally available to regular investors and that could move a company’s share price.

Mr Bennett said neither Mr Mansfield nor Mr Kizon were insiders at AdultShop, whereas Mr Day and Queensland-based online pornography guru Dean Shannon were.

He said Mr Shannon and his partner were keen sellers of AdultShop shares in 2002 but failed to comply with shareholding disclosure rules while selling.

Mr Kizon’s lawyer Con Heliotis said Mr Day had spruiked AdultShop’s story to investors including Mr Mansfield, share newsletter publisher Rene Rivkin and probably Kerry Packer.

He said despite seemingly being a fundamental witness, prosecutors were not calling Mr Day as a witness and no law enforcement officers would be appearing to explain why he was not charged.

“He was telling lies and he was putting out false figures – all very serious crimes under the Corporations Act,” he said.

He said Mr Kizon had reached the status of colourful identity thanks to relentless media attention.

Mr Packer’s investment company bought and sold a little over 1 per cent of AdultShop, making a $780,000 profit, the jury has been told.

Mr Bennett said Mr Packer’s company had sold out of AdultShop weeks before Mr Day told Mr Kizon about the supposed 4.9 per cent investment.

In what is known in the market as front running, Mr Packer’s share manager had bought shares in the week before an AdultShop announcement about surging profits from its online pornography business, Mr Bennett said.

The Packer group sold out in the week after the announcement and pocketed a profit that amounted to an annualised return of 3800 per cent.

The trial continues tomorrow.