A magistrate admitted yesterday that his decision to spare a merchant convicted of insider dealing from a jail term and a fine was based on the 'wrong principle'. Magistrate Anthony Yuen Wai-ming on August 19 ordered toy merchant Pablo Chan Pak-hoe to perform 240 hours' community service for making an unjust profit of HK$120,000 on the insider deal. Yuen ordered Chan (pictured) to pay back the Securities and Futures Commission's investigation cost of HK$44,478 but not the proceeds of his crime. The SFC immediately applied to the court for a review of the sentence. In a review hearing at Eastern Court yesterday, Yuen jailed Chan for four months and fined him HK$120,000. But he allowed Chan to be freed on HK$50,000 bail, pending an appeal of his conviction. Yuen said: 'I agree that I've placed too much weight on the probation officer's report and too little weight on the facts of the case.' After a 15-day trial, Yuen found last month that Chan had used confidential information about a proposed takeover and made a profit by trading shares of listed film and video distributor Universe International Holdings in 2008. He acknowledged yesterday that he did not put sufficient weight on the defendant's part in the negotiation of the deal, his abuse of position and the planning of the offence. Counsel for the SFC Allen Lam argued that the non-custodial sentence and a lack of fine were inadequate. Chan should not have been ordered to perform community service because he did not show genuine remorse, Lam said, arguing that he had refused to give up his proceeds of crime. 'It's clear that he didn't think he had done something wrong,' Lam said. However, Chan's lawyer Christopher Chain said the defendant did not refuse to pay up. Chain quoted from a report by the probation officer which said the defendant had the 'sincerity to be a law-abiding citizen' and he was 'willing to shoulder legal liability'. Lam urged the magistrate to consider that Chan opened a security trading account three months prior to committing the offence. The account showed 30 dealings within a month and a half in May and June 2008. In determining the length of jail term, Yuen said the defendant had acted alone, had a clear record and the financial benefit involved was not substantial. Insider dealing became a criminal offence in 2003. The statutory maximum penalty is 10 years in jail and a HK$10 million fine.