I was sure the right thing to do was to report it to the CEO (there wasn't anyone else higher in the hierarchy to consider) for certain chastisement and correction. I was commended and the sysadmin got a browbeating.
I definitely did right by the policies in place. However, not too long after I realized there was certainly a better way to handle it and my behavior had more to do with scoring points than doing the right thing.
This was also someone who went out of their way to mentor younger employees and help kindle a passion for this line of work. I was a major beneficiary of this, so I look back upon that incident with nothing but regret.