It was as strong a case of insider trading as ASIC could wish for, carrying a maximum sentence of five years in jail and a maximum fine of $220,000 (these maximum penalties have since been increased to 10 years and $765,000). Gay pleaded guilty and was fined $50,000. He kept the bulk of the proceeds of his crime and avoided a jail sentence. Whilst the AFP could have launched crime recovery action, it chose not to. During sentencing Justice Porter described Gay as 'an exemplary character', thinking the crime 'not in the serious category of insider trading'. Apparently, stealing $750,000 from your fellow shareholders is not evidence to the contrary. Interestingly, Fairfax's Patrick Durkin reported that in the month of Gay's conviction, in the same Launceston court, a 48-year old was sentenced to 10 months in jail for stealing $71,000 in shipping containers. And you can bet that had a Gunns accountant pocketed $750,000, they'd be behind bars after being compelled to pay back the proceeds. But CEOs stealing from shareholders? Sorry, not in the same league.

This is Medcraft's first problem. The institutions he needs to support ASIC in upholding current laws see white-collar crime as a lesser kind of offence. His second problem is that many of Medcraft's employees agree with that view. ASIC chose not to appeal Gay's sentence, nor did it pursue directors of RBA subsidiaries Securency and Note Printing Australia for breaches of directors' duties, despite the AFP bringing bribery charges against them. ASIC also recently dropped criminal proceedings against two former AWB directors in connection with the Iraq oil-for-food scandal. Instead, it pursued a pre-arranged settlement, with Judge Mark Weinberg saying his court was reduced to 'rubber stamping' secret deals between ASIC and the accused. But evidence still mounts. Medcraft last week defended ASIC's decision not to pursue David Jones directors for insider trading, claiming they had already indicated their intention to buy shares before they came into possession of market sensitive information, in which case the law did not apply. Directors looking to make a few bob on the side now have their riding instructions: show intent to purchase stock in every trading window, get advance approval for it and then act as you see fit between receiving market sensitive information and it becoming public.

I have yet to meet anyone who thinks ASIC doesn't have a case against the David Jones directors. So it's hardly a good look for the corporate regulator to moan about pitiful fines when it appears so reluctant to prosecute apparently strong cases. Medcraft's third problem explains why. The public believes ASIC is about corporate law enforcement, which is only partly true. Its other task is to raise huge sums of money – over $300m in the last financial year – for the federal government. Those two roles sit uneasily with each other. And when ASIC is faced with a long legal battle with a well-funded opponent, they're in direct conflict. ASIC's legal costs are truly horrendous. Securing the 2009 convictions against James Hardie directors, for which they were each fined the princely sum of $25,000, is believed to have cost ASIC $35m, a little more than the $30m estimate of its recent and unsuccessful Fortescue case. At last week's committee hearings, Medcraft said the case against Storm Financial had cost $50m. The corporate regulator simply cannot afford to run many cases of this ilk, at least not without slashing the dividend it pays to government. So when a whistleblower calls up with information of wrongdoing at Commonwealth Bank's financial planning arm, you can see why it might experience a little weakness in the knees.

The suspicion grows after a trawl through the names of ASIC's prosecutions for insider trading, of which there have been 32 since 2009, resulting in 23 prosecutions and a handful still pending. The names of the guilty don't exactly leap out at you, the fines even less so. Why? Because the little guys are so much cheaper to prosecute. ASIC's most recent six-monthly enforcement report reveals that, excluding small business, there were 27 criminal actions but 46 'administrative remedies' and 27 'enforceable undertakings/negotiated outcomes'. This hardly dispels the notion that ASIC is reluctant to use the courts, and with expenses like those incurred against Storm and James Hardie, who can blame it? So Greg Medcraft finds himself in an unenviable position. First, he has to convince police, judges and his own staff that white-collar crime needs to be taken more seriously. Then he has to lobby politicians to increase punishments and raise penalties, knowing that corporate Australia – the target of his more aggressive approach - is a big funder of the main political parties. And finally, he has to convince the government to give him more money, or find a way of prosecuting cases that don't cost tens of millions of dollars. Without these changes, the tiddler offenders will be prosecuted while the big fish get an easy ride. Right now, the economics of ASIC mean it can't be any other way, although Medcraft could never admit to that.

So please, go easy on him - Medcraft has an all-but-impossible job. Maybe the $246,490 he spent on travel and accommodation expenses in the first 11 months of last year was because he needed a break, not a beating. John Addis is a Director of Intelligent Investor Share Advisor. For help finding profitable stocks for your investment portfolio that won’t fall foul of ASIC, take out a 15-day free membership.