After 3♠ the East player says thoughtfully "400 or 500" and then pulls out the double card. South turns to East and says "You really cannot say that". At this point the Director happens to be wandering by and is asked for a ruling. He ascertains the facts are as above, South adding that they believe this has communicated information to West and East saying that they spoke for their own benefit and not for their partner's. The Director rules that everything is OK and play continues.
The penalty from 3♠X is easily enough to give E-W a top. It turns out that South has made a poor bid with ♠J9xxx and an outside ace and North has raised with 8xx. East now thinks South was being cheeky in calling the Director over the double after overcalling with this hand. South in turn thinks the table result should stand but is openly angry that E-W have not received any penalty.
Was the Director's ruling correct? Should East and/or South be penalised for their actions?