4 SMBC Nikko employees arrested for market manipulation

Jiji Press

11:44 JST, March 5, 2022

TOKYO (Jiji Press) — Tokyo prosecutors arrested four senior employees at SMBC Nikko Securities Inc. on Friday on suspicion of manipulating stock prices in violation of the financial instruments and exchange law.

Investigators from the Tokyo District Public Prosecutors Office searched the Tokyo headquarters of SMBC Nikko, a unit of Sumitomo Mitsui Financial Group Inc., for evidence.

The SMBC Nikko employees are suspected of placing buy orders to evade declines in prices for shares of five publicly traded companies between December 2019 and November 2020.

This involved block offer trading in which shares are bought in off-hours trading for sale to investors.

It is very unusual for a senior employee at a securities house considered to play a role in ensuring the fairness of markets to be arrested for alleged market manipulation.

The four employees include Trevor Hill, 51-year-old senior managing executive officer and head of the equity department.

The Securities and Exchange Surveillance Commission searched the Tokyo headquarters of SMBC Nikko in June last year for alleged violation of the financial instruments and exchange law.

Market manipulation banned under the law include placing trading orders for particular stocks frequency to appear as if trading in the stocks is active, and artificially moving and fixing stock prices.

Offenders are subject to a prison term of up to 10 years or a fine of ¥10 million or less or both. Offending companies will be slapped with a fine of up to ¥700 million.

SMBC Nikko, which started operations in October 2009, has about 120 offices across Japan.