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The lawyer at the centre of Canada's biggest insider trading case is facing a 39-month jail sentence and $2.8-million in payments to regulators for his role in a cross-border scheme that netted him and another lawyer about $9-million (U.S.) in illegal trading profits.

Mr. Justice Robert Bigelow of the Ontario Court of Justice told a courtroom yesterday that he intends to impose the lengthy jail term, a record in Canada, after he heard a joint sentencing proposal from lawyers for Stan Grmovsek and the Crown. Judge Bigelow reserved his final sentencing decision until January.

Mr. Grmovsek is set to appear Nov. 23 before a New York District Judge, who will be asked to approve a similar U.S. jail term. If the judge rejects a proposal that the accused serve the Canadian and U.S. sentences concurrently, Mr. Grmovsek could face a sentence of more than six years. Under a Canada-U.S. treaty, Canadians are entitled to ask to serve sentences in their home country.

If Judge Bigelow approves the sentencing proposal, it would represent the longest jail term imposed in a Canadian insider trading case. The previous record was six months.

Mr. Grmovsek, a former business lawyer, and his law school friend Gil Cornblum, conducted an elaborate 14-year operation that involved early morning "spelunking" hunts for takeover secrets in the caves of Toronto and New York law firms that employed Mr. Cornblum. Armed with Mr. Cornblum's confidential data, Mr. Grmovsek used offshore accounts and the trading accounts of unwitting friends and family to buy stocks of companies ahead of such bullish news as takeover bids, stock buybacks or asset sales.

The case against Mr. Cornblum was closed after he killed himself last week on the eve of his planned appearance with Mr. Grmovsek to plead guilty to insider trading and fraud charges. In an emotional address to the court, Crown attorney John Corelli told the court that investigators in the case "would never have wanted this to happen."

A statement of facts filed with the Ontario court said that Mr. Cornblum stopped tipping in 1999, despite Mr. Grmovsek's "pestering questions," but resumed the practice again in 2004. The document said he resumed feeding illegal tips in 2004 at a time of personal difficulties and Mr. Grmovsek's "incessant calls."

Mr. Grmovsek disputes the account in the statement and said it was instead Mr. Cornblum who resurrected the scheme because his stock portfolio had been wiped out in tech stocks.

Until 2008 most of the pair's illegal trades involved small amounts of stock divided among several accounts. By the spring of that year, however, Mr. Grmovsek said the stock purchases became "moronic" and were bound to draw attention. It was a February, 2008, profit of $612,000 on Possis Medical Inc. stock ahead of a takeover offer that drew the attention of regulators.

Within weeks of the trades, U.S. regulators were asking Dorsey & Whitney LLP to explain the unusual trading in their client's stocks. When Mr. Cornblum was confronted in April by his employer, Dorsey & Whitney, the statement said he initially denied any involvement. By May the two men were co-operating with regulators.