"We found Somji's testimony to be generally forthright, and his specific denials credible. In short, we believed him," the three-judge panel said in its decision.
Somji was CEO of Matrikon Inc., a provider of software and information technology services to industrial customers that was acquired by technology giant Honeywell more than two years ago for $145 million.
The ASC's enforcement branch said Somji's brother-in-law, Kenneth Healing, made nearly $29,000 in profit by purchasing shares of Matrikon weeks before it announced a new multimillion-dollar contract with Norwegian energy firm Statoil and record quarterly results in January 2010.
Somji, his sister, and brother-in law were vacationing in Arizona at the time.
"As relatives occasionally in contact, whether in the same city or not, the opportunity for tipping was always there. Therefore, Somji's physical proximity to the Healings in Arizona at the time tells us very little. We note that the mere fact of direct interaction among them in December 2009 might have triggered in the Healings a revived and perfectly innocent interest in Matrikon," the panel said.
The ASC also says Healing purchased $245,000 in stock in the days leading up to the Honeywell acquisition announcement and made more than $36,000 in profit when he sold the shares.
Lawyers for the commission argued Healing's buying spree followed a telephone conversation between Somji and his sister, Healing's wife, four days before the announcement.
But the panel said that alone didn't convince it that Somji divulged information he shouldn't have.
"One possibility is that Somji told his sister about the Honeywell transaction, which information Healing either overheard or learned second-hand from Somji-Healing," it said.
"Other possibilities might include unspecific information — perhaps merely an impression conveyed by Somji — that interesting things might be happening at Matrikon. We could posit that the Honeywell negotiations — whose successful conclusion would present Somji with millions of dollars — might naturally have engendered in him on that day a degree of excitement or elation that could have communicated itself in the course of a family-centred telephone conversation."
In an earlier settlement, Healing agreed to pay a total of $65,000 to the ASC, though he never testified that he acted on a tip from Somji.
For three years, Healing can only trade in securities or exchange contracts in one personal bank account through a broker, who has been given a copy of the settlement agreement.
He can trade in one Registered Retirement Savings Plan, one Locked-In Retirement Account and one Tax Free Savings Account, so long as it's also through a broker familiar with the agreement.
Healing can also invest in companies whose shares aren't publicly listed.
The ASC has dropped its case against Sholina Somji-Healing, Healing's wife and Somji's sister.