Tokyo prosecutors on Friday arrested four employees of SMBC Nikko Securities Inc. in connection with alleged stock manipulation and searched the Tokyo headquarters of the major Japanese brokerage.
The four employees, including Trevor Hill, the 51-year-old head of the company's equity department, are suspected of trying to prevent a decrease in share prices for five individual stocks on the First Section of the Tokyo Stock Exchange through actions including placing buy orders from December 2019 to November 2020, investigative sources said.
It is rare for Tokyo prosecutors to raid a major Japanese securities company for market manipulation charges. SMBC Nikko declined to comment on the arrests.
The other three suspects are deputy equity chief Alexandre Avakiants, 44, Makoto Yamada, 44, and Shinichiro Okazaki, 56.
Prosecutors believe the four were involved in transactions called "block offerings," which are used when large shareholders sell a significant part of their stake in a company.
Securities houses often pick up such shares outside trading hours and invite interested investors to buy them.
According to the sources, the four denied the allegations during voluntary questioning, claiming the moves were legitimate trades and they had no intention to support the stock prices.
The crime of stock manipulation in violation of the Financial Instruments and Exchange Act is punishable by up to 10 years in prison or fines of up to 10 million yen ($87,160), or both.
With regard to the case, the Securities and Exchange Surveillance Commission, Japan's securities watchdog, also raided the brokerage last year.
