Why didn't he get jail time like other insider traders?
There is some ambiguity about the definition of a "material benefit" - does that include friendship? Advice? Soft promises of future business arrangements? I assume the government didn't have a 100% solid angle on that element of the crime.
Trading based on non-public material information is what is meant by Insider Trading and it absolutely is illegal. [1]
1. https://www.investor.gov/introduction-investing/investing-ba...
> Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, on the basis of material, nonpublic information about the security.
It seems the SEC is going after him with the latter clause. His long time business contact gave him sensitive non-public information, and he should have known better than to trade on it, because it was so sensitive and who it came from, a long time relationship of trust and confidence.
FTA:
> We allege that Bechtolsheim, while serving as the chairman of a publicly traded company, abused the trust of a longtime business contact who had shared highly sensitive information about an imminent corporate acquisition," said SEC market abuse unit chief Joseph G Sansone.