The case underscores the legal risks for foreign professionals working in Japan
Five former executives at Japanese brokerage SMBC Nikko Securities Inc. are about to hear verdicts in a long-running stock market manipulation case, marking the culmination of a scandal that rocked Japan’s financial industry.
The Tokyo District Court is expected to deliver rulings later Tuesday concerning the firm’s ex-head of equity Trevor Hill and his deputy Alexandre Avakiants, as well as three Japanese former executives. Prosecutors are seeking multi-year prison terms for their alleged role in trying to support stock prices ahead of so-called block trades. The five defendants have denied wrongdoing.
When the allegations surfaced in early 2022, they shone a spotlight on Japan’s financial sector and resulted in regulatory penalties against the brokerage. The subsidiary of Sumitomo Mitsui Financial Group Inc., Japan’s second-largest banking group, posted losses and cut costs in the wake of the revelations as clients took their business elsewhere. The firm’s top executives took pay reductions to shoulder responsibility.
The case underscores the legal risks for foreign professionals working in Japan. The country’s justice system has faced criticism for its conviction rate of more than 99%, suggesting to organizations including Human Rights Watch that trials are practically forgone conclusions.
Still, criminal proceedings against foreign business executives are relatively rare in Japan. The most high-profile case in recent years was against Carlos Ghosn, the former Nissan Motor Co. chairman, who was accused of financial misconduct and fled the country before he was tried.
The former SMBC Nikko executives are expected to appear at the court on Tuesday morning. Hill and Avakiants have been out on bail but unable to travel abroad without the court’s permission.
It has been more than two and a half years since prosecutors brought charges against the individuals and the firm. Ex-manager Teruya Sugino received a suspended prison sentence in 2023 after admitting to the accusations. SMBC Nikko itself pleaded guilty.
Prosecutors in March asked the Tokyo court to sentence Hill to two and a half years in jail. They also sought two years each for Avakiants and former general manager Shinichiro Okazaki. Other penalties pursued include four years’ imprisonment for former general manager Makoto Yamada and two and a half years for ex-deputy president Toshihiro Sato.
SMBC Nikko resumed block offers in April after renaming them retail offers and introducing a tighter internal monitoring of the transactions.
© Bloomberg
