Daughter lives with me(dad). Ex wife who by daughters choice is not very involved in her life wants me to punish her. I am not sure if a punishment is appropriate

Dad, what do you think is appropriate for a 14 year old?

My gut tells me to tighten up restrictions to make it more difficult for repeat performance. And use it as learning/communication opportunity. Only prob is daughter currently will only discuss it with a close female adult friend who is kind of acting as a go between

Let me see my house, counseling to learn the issues of sex at such a young age.
Depending on where it is, criminal charges against the boy.

Grounded seriously not just tighter controls, but strict controls.

I feel for the situation you find yourself in.

I recommend making an appointment with a family physician OR gynecologist for her to discuss the ramifications of sex, birth control, etc. If there is someone you both trust that she can speak with all the better, but if not, go to the professionals like nearby clinics that might offer sexual education.

Also, I agree with Fr_Chuck that she'll need very strict rules from now on.

You are her dad, she is living in your house. She needs to see a doctor, be talked to about the ramifications of sex at such an early age. Then you need to ground her and tighten restrictions. Also find out who she is having sex with and talk to his parents. This is not something to be swept under the rug. 14 is too young to be having sex.

I am not sure if a punishment is appropriate

My initial reaction to reading this was, what kind of lousy father are you. But then I thought about it more and I realized you are right. This is not a case of punishment. You don't want to give her the impression that she is a bad girl that deserved punishment.

But you do have to realize that this is not allowable behavior. You need to impress upon her, either alone or through the female confidant, that this is dangerous behavior with very serious consequences. She also needs to understand that she betrayed a trust and that also has consequences. Those consequences mean that she will have less freedoms until she earns back your trust.

And there is one more thing. You need to talk to the parents of the boy and make sure they are aware of their son being sexually active. Also the age of this boy matters. The older he is the more it may be that he is taking advantage of your daughter.