The most senior executive to be convicted of insider trading in Australia, John Gay, felt the hand of a security guard congratulating him, rather than showing him the cells, in court on Friday.
Gay, the former Gunns chairman, 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," ASA 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 that he didn't receive any kind of custodial sentence, because 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, the controversial former chairman of failed timber giant Gunns, was found by Justice David Porter to be of exemplary character.
His crime, though serious, did not deserve imprisonment, Justice Porter 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, later 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 around $3 million.
Gay, 70, decided to sell Gunns shares in order to clear personal debt after he was diagnosed with prostate cancer in July 2009 and advised to settle his affairs.
The judge said factors that made this case less severe included evidence that Gay had made up his mind to sell shares before he received the information; that his health affected his decision-making; and that he was advised he had complied with a "selling window" available to directors under company policy.
In sentencing Gay, he took into account the effect of a conviction in disqualifying Gay from corporate leadership, and personal cost of publicity.
Meanwhile, the company he chaired until May 2010 is about to enter a second year in administration after collapsing, owing banks $445 million, and other secured creditors $190 million.