The most senior executive to be convicted of insider trading in Australia, John Gay (pictured) felt the hand of a security guard congratulating him, rather than showing him the cells, in court on Friday.
Gay, the former chairman of failed timber giant Gunns, left the dock after he was convicted in the Tasmanian Supreme Court and fined $50,000. He was banned from managing corporations for five years, but escaped a prison term.
The Australian Securities and Investments Commission said the conviction showed the regulator was committed to combating insider trading.
But legal experts said the penalty sent a weak message. "There's going to be plenty of people who will be disappointed with the sentencing judgment, and .., I think it's fair to say that [ASIC] will be disappointed," said Professor Ian Ramsay, a corporate law expert at Melbourne University.
"It's as if the public attention given to this insider trading case, and no doubt the loss of reputation, was [considered] more significant than a financial penalty for someone of his financial means."
The Australian Shareholders Association said the sentence was disappointingly light. "This was the first time that an ASX100 chairman pleaded guilty to insider trading, and the judge missed a golden opportunity to send a wider deterrence message," chairman Ian Curry said.
John Sutton, a partner at Armstrong Legal, said the court's decision seemed "remarkable"."I find the result to be astounding ... the extent of the notional investment is $3 million and in NSW people will get custody, or an alternative to custody, for a lot less than that."
Gay was found by Justice David Porter to be of exemplary character. His crime, while serious, didn't deserve imprisonment, the judge said.
The court heard Gay avoided a loss of $798,000 by selling Gunns shares in December 2009 after a report to directors revealed a revenue collapse, disclosed to the market in February 2010, when the share price fell 20¢.
As his trial was due to begin earlier in August, Gay changed his plea to guilty on a single charge over the sale of 3.4 million shares worth about $3 million.