In its bid to have their sentences increased, the Crown has compared Lombard Finance directors to Nathans Finance boss John Hotchin.
Crown lawyers Colin Carruthers QC and Dale La Hood asked the Court of Appeal to impose penalties including jail and nothing less than home detention.
In a cross appeal, Sir Douglas Graham, Bill Jeffries, Lawrie Bryant and former ceo Michael Reeves want the court to quash their High Court convictions and community work and reparation penalties.
Mr La Hood told the court when directors entrusted with investments failed and caused significant loss, it was right to compare them to Nathans Finance boss John Hotchin.
Nathans Finance collapsed in 2007 owing investors about $174 million. Mr Hotchin, who earlier pleaded guilty to misleading investors, was sentenced to 11 months' home detention, ordered to do 200 hours of community work, made $200,000 reparation to company receivers and gave evidence against his fellow directors.
"Taking into account Lombard's losses of about $125 million, the starting point had to be 18 months' jail for Sir Doug, Jeffries and Bryant," Mr La Hood said.
All four avoided prison terms after being found guilty in March last year of misleading investors by signing off on offer documents which omitted material information about Lombard’s liquidity in late 2007.
Sir Douglas and Bryant were sentenced to 300 hours' community work and ordered to pay $100,000 reparation. Jeffries and Reeves were sentenced to 400 hours' community work.
He said the reputations of former justice ministers Sir Douglas and Jeffries were likely to have been used to attract investors.
Mr La Hood wanted a longer starting point of two years in jail for Reeves, but accepted home detention was a reality and said any sentence could be in conjuction with community work.
"To call this collapse a case of mere mis-judgment is too generous. It was gross negligence at the very least," he said.
"The directors should have re-evaluated the prospectus or withdrawn it."
He said the position was progressively getting worse and yet the directors tried to ride out the storm, despite internal documents saying things were not looking good.
Earlier, Mr Carruthers said it was unthinkable for the directors to say they thought the company would get through the rough patch.
He said by December 2007, all the pointers were there to show the company would not get through.
Justices Tony Randerson, John Wild and Christine French have reserved their decision.