Criminal charges against Cesar Alierta have been dismissed by Madrid's Supreme Court after it was decided that too much time had passed, despite the fact that the court said insider trading had taken place while Mr Alierta was in charge of his previous company, tobacco firm Tabacalera.
Prosecutors alleged that Mr Alierta had purchased shares in the business in 1997, prior to the acquisition of a US cigar maker and a rise in the price of tobacco.
He and his nephew Luis Placer were said to have made â¬1.8 million (Â£2.5 million) from the transactions, but he has been cleared under Spain's statute of limitations laws.
Mr Alierta would have been given up to four-and-a-half years in prison had he been found guilty.
In related news, claims that chairman of South Korean chemical manufacturer OCI Co Lee Soo-young has conducted insider trading have been refuted by the company.