Yuji Naka faces prison sentence for Square Enix insider trading offences

Suspended sentence sought by defense

According to a report from Abema Times, (as translated by VGC) Sonic the Hedgehog co-creator Yuji Naka is facing 2.5 years in prison — in addition to receiving a $1.2 million (USD) fine — for his role in insider trading schemes that took place during his time at developer Square Enix.

The punishment is being requested by the prosecutor’s office at the Toko District Court, who argue that Naka had violated Japan’s Financial Instruments and Exchange Act, stating Naka had shown “no signs of remorse” for the offense. Naka was first arrested in November 2022 under suspicion that he had used insider knowledge in order to draw large sums of money on the stock market. Naka was then re-arrested again a month later on additional charges.

The prosecution argues that Naka, alongside fellow former Square Enix employee Taisuke Sazaki, knowingly invested in Japanese developer ATeam Entertainment, ahead of the announcement that the studio would be developing 2021 mobile release Final Fantasy VII: The First Soldier. Naka reportedly purchased 120,000 shares in ATeam at a cost of around ¥144.7 million yen (roughly $834,000 USD).

In a separate incident, Naka, Sazaki, and a third employee, Fumiaki Suzuki, were charged with purchasing stock in another studio, Aiming, ahead of Square Enix revealing that it would be working on Dragon Quest: Tact. In this instance, Naka was accused of having purchased ¥47 million (roughly $336,300 USD) of shares before the public announcement. The prosecution believed Naka ascertained the details ahead of time by accessing an internal website containing meeting transcriptions.

Naka’s defense team is hoping to reduce the fine and is currently seeking a suspended sentence in the hope of preventing Naka from serving any jail time. A final verdict is expected in July.

Naka left Square Enix in 2021, following the critical and commercial failure of lurid platformer Balan Wonderworld. After the fact, Naka would also file suit against the publisher, arguing that he had been removed from Balan’s development six months ahead of its much-maligned release.

Yuji Naka could be sentenced to 2.5 years in prison for insider trading [VGC]

Chris Moyse

Senior Editor – Chris has been playing video games since the 1980s and writing about them since the 1880s. Graduated from Galaxy High with honors. Twitter: @ChrisxMoyse

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