Stay informed with free updates
Simply sign up to the Japanese business & finance myFT Digest — delivered directly to your inbox.
A Japanese court has handed down guilty sentences to five former executives at brokerage SMBC Nikko Securities for their role in market manipulation, capping a scandal that rocked the nation’s financial sector.
The Tokyo District Court gave suspended prison sentences on Tuesday to two foreign nationals — Trevor Hill, an American who was head of equities, and his British deputy Alexandre Avakiants — as well as three Japanese executives, according to local media reports.
The indictment had alleged that the SMBC Nikko executives supported the closing prices of 10 Tokyo-listed stocks between 2019 and 2021. It charged them with violations of the Financial Instruments and Exchange Act. The five had pleaded not guilty.
The trial hinged on a highly nuanced debate over the precise nature of whether the act of buying shares at the end of the day constitutes stock manipulation under Japan’s legal definition of “price fixing”.
The headquarters of SMBC Nikko, Japan’s third-largest brokerage, was raided in March 2022. Prosecutors then brought charges against the company and five bankers, plunging Japan’s financial industry into unprecedented territory.
SMBC Nikko was fined ¥700mn ($4.7mn) with a surcharge of ¥4.47bn for market manipulation in 2023. Another former senior manager also received a suspended prison sentence at an earlier hearing. SMBC Nikko did not respond to a request for comment on the latest set of sentences.
Hill, a former UBS banker, was sentenced to two-and-a-half years in prison, suspended for five years. Avakiants received a shorter suspended sentence. Market manipulation charges carry a maximum penalty of 10 years’ imprisonment in Japan.
Hill’s arrest and conviction highlighted the risks of becoming a senior manager at a Japanese company, where legal responsibility can be pinned to a small group of individuals, said senior bankers.
The sentencing comes as Tokyo attempts to position itself as a global financial centre with fair and transparent markets that can compete with Hong Kong and Singapore.
Besides a higher tax regime, critics of Tokyo argue that institutional funds and other financial services have been deterred by Japan’s justice system and the threat of prolonged imprisonment without charge, in an effort to extract confessions.
A senior SMBC Nikko trader in his 50s died of a brain aneurysm in June 2021, shortly after multiple interrogation sessions that lasted up to 10 hours, as part of the probe into market manipulation.
Although a complaint by Nikko did not directly link the death with the questioning, according to people familiar with the matter, it focused on the stress caused by the investigation.
