Japanese prosecutors are set to seek penalties against former executives at SMBC Nikko Securities Inc. accused of stock market manipulation, in a long-running case that’s being closely watched by the expat financial community in Tokyo.
Former head of equity Trevor Hill, his ex-deputy Alexandre Avakiants and three others are expected to hear the prosecution’s requests in the Tokyo District Court on Thursday, roughly three years after they were indicted.
The court has yet to deliver a verdict in the case against the five defendants, who have denied wrongdoing. Another former executive received a suspended prison sentence in 2023 after admitting the charges.
The case has drawn attention to the high stakes for foreign professionals who come into legal strife when working in Japan. The country’s justice system has faced criticism for its conviction rate of more than 99%, which means trials are often viewed as practically forgone conclusions.
Japan’s financial industry was rocked when the allegations surfaced in early 2022, resulting in regulatory penalties against the firm and causing some clients to take their business elsewhere. SMBC Nikko, a unit of Japan’s second-largest banking group, posted losses and made cost cuts, while top executives took pay reductions to shoulder responsibility.
The trial started more than two years ago after prosecutors brought charges against the six individuals as well as SMBC Nikko, accusing them of propping up share prices for transactions known as block trades. Individuals convicted of market manipulation in Japan face a maximum fine of ¥10 million or imprisonment of as long as 10 years, or both.
The Tokyo court in 2023 told SMBC Nikko to pay a ¥700 million fine and forfeit ¥4.47 billion in earnings after it admitted to the charges. It sentenced Teruya Sugino — one of the six — to an 18-month prison term, suspended for three years.
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