Wendy Alexander will not be reported to prosecutors after her Scottish Labour leadership campaign received an illegal donation, election watchdogs have said.
The Electoral Commission found there was not sufficient evidence to prove an offence, but said not all reasonable steps had been taken to prevent one.
Ms Alexander will continue with her job, but the SNP said the "not proven" finding had weakened her leadership.
Her campaign accepted £950 from Jersey-based developer Paul Green.
Ms Alexander, whose campaign team admitted the donation broke the law, said she had been vindicated, but expressed "deep regret" that the money was ever accepted.
The commission ruled Ms Alexander did not take all reasonable steps to comply with the law, but found she had taken "significant" steps.
The Scottish Labour leader said the decision had proven her "honesty and integrity", but insisted lessons would be learned.
"I welcome the commission's decision that there is no basis for any finding of intentional wrongdoing on the part of me or my campaign team," she told a press conference at the Scottish Parliament in Edinburgh.
"I deeply regret that my campaign accepted a £950 donation, which it transpired was in breach of the rules, and I apologise, again, to my colleagues, my party and the public."
Ms Alexander added: "Personally this has been both a salutary, and bruising experience. Some of the coverage has hurt me and caused distress to many entirely innocent friends, my family and donors."
Mr Green's donation, solicited by Labour MSP Charlie Gordon, broke electoral law because the businessman is not a UK voter.
Charlie Gordon had sought the donation from Mr Green
In a statement Mr Gordon apologised publicly to Ms Alexander, Mr Green and the chairman of the Glasgow South Labour Party, "for having unwittingly misled them".
"I re-iterate my deep regret that my error prompted a chain of events which embroiled other people," he added.
"I thank the many people, from all walks of life and from across the political spectrum, who sent me messages of support."
The Electoral Commission said it was "not in the public interest" to report to the Crown Office or Procurator Fiscal Service on the issue of whether accepting the donation was an offence.
It also ruled there was no evidence to establish that Ms Alexander's campaign team had sought to conceal or give false information surrounding the cash.
Scottish First Minister Alex Salmond said: "As far as what the Electoral Commission have had to say, it sounds a bit like a not proven - there's not sufficient evidence for this or not sufficient evidence for that."
He went on: "This whole affair has been hugely damaging for Wendy Alexander's leadership of the Labour party and a part of a pattern of mis-donation across the Labour party, which has been hugely damaging for that institution."
Scottish Conservative deputy leader Murdo Fraser said the donation issue was "the least of Labour's worries", claiming that the party's involvement the Scottish Government's budget, passed on Wednesday, was "a complete and dismal failure".
Liberal Democrat MSP Mike Rumbles added: "The Electoral Commission's conclusions underline the lack of transparency and openness which has dogged Labour politicians, including Wendy Alexander, who have faced serious questions about inappropriate or illegal donations."