It's been a rough few years for Sonic the Hedgehog creator Yuji Naka, and his arrest late last year was certainly no exception. It revolved around accusations of him trading Square Enix stock (where he was employed at the time) before they announced their collaborations with Aiming Inc. (Dragon Quest Tact) and ATeam (Final Fantasy VII: The First Soldier) so that he could reap the rewards of high share prices. Today, Yuji Naka attended his first day in court in Japan's Tokyo District Court.

During the trial, he pleaded guilty to violating the Financial Instruments and Exchange Act, saying, "I was appointed as a senior manager because of my achievements in developing world-famous games as a game programmer at another major game maker. I accessed a website that posted about 'Dragon Quest' and found out about the joint development of new works in the 'Final Fantasy series', so I bought a total of 130,000 shares and earned a gain of over 20 million yen on sale."

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Sources: NHK / TBS DIG

 

[tech3475]

How's that illegal? Some people know more about shares some people less. Isn't he did a good thing for company by buying it's shares?

The issue is using knowledge about a company unknown to the public when deciding to buy/sell.

The inverse to what Naka did can also apply, selling shares you personally own just before negative news is released which causes the share price to go down. Again the issue is if you sold because you knew something before the public did.

 

[FAST6191]

How's that illegal? Some people know more about shares some people less. Isn't he did a good thing for company by buying it's shares?

For the company. Not really though that gets more philosophical. Classically a company would get money during the initial public offering (and anything leading up to it) and that is the end of that, some have since gone on to issue more but that tends to be seen as diluting what is out there and not that good. Some also buy back shares which is also contentious.
As well as the selling before bad news hits thing mentioned in the other post he might never have actually bought shares. Instead he might well have bought an options contract (have not seen the facts of this case but it is the traditional way this is done as far easier to get into and far more profit potential) which means it is the market maker/one he bought the contracts from that lost out instead.

Some more, some less is fine if you are using public information -- you can be a line goes up, line goes down type of trader if you want, you can be a degenerate gambler if you like, or you can watch the consumer sentiment, debt levels (company, consumer, national, regional... the lot), natural disasters, reviews of product, reviews of competitor products, reviews of off the wall competitors (horse and buggy business and suddenly there is cars sort of thing), satellite imagery of their car parks ( https://www.theatlantic.com/magazine/archive/2019/05/stock-value-satellite-images-investing/586009/ ), have robots read the news to guess price movements (CEO fraud embezzlement, class action... all negative and likely to move stock price down) and so on and so on for the markets the company in an attempt to do better than the others at guessing future moves. All these are considered perfectly normal behaviour. The trouble for insider trading (using information you came by say during the course of your employment that nobody else outside the company knows and is likely to change how the company is perceived) comes in that if it is allowed it will very quickly devolve into only those that have the insider information get to play in the market else they just lose, various investment firms go bankrupt (which means nobody retires), no money gets circulated around the economy beyond what has to be for simple transactions and that is all very bad news for your advanced economy. Or if you prefer then there is a reason it is treated up there with making counterfeit currency and rich and powerful people get nailed for it where they skate on all manner of other nastiness.

 

[leon315]

i BELIEVE the biggest inside trader Nancy Pelosi has something to say about it.

 

[Hanafuda]

Japanese laws regarding insider trading are exceedingly strict, it’s considered a dishonourable business practice. I guess admitting to it all is one way to save face.

Or to be the scapegoat to cover and/or run interference for others. "Taking one for the team" is as Japanese as it gets.

 

[Naster]

For the company. Not really though that gets more philosophical. Classically a company would get money during the initial public offering (and anything leading up to it) and that is the end of that, some have since gone on to issue more but that tends to be seen as diluting what is out there and not that good. Some also buy back shares which is also contentious.
As well as the selling before bad news hits thing mentioned in the other post he might never have actually bought shares. Instead he might well have bought an options contract (have not seen the facts of this case but it is the traditional way this is done as far easier to get into and far more profit potential) which means it is the market maker/one he bought the contracts from that lost out instead.

Some more, some less is fine if you are using public information -- you can be a line goes up, line goes down type of trader if you want, you can be a degenerate gambler if you like, or you can watch the consumer sentiment, debt levels (company, consumer, national, regional... the lot), natural disasters, reviews of product, reviews of competitor products, reviews of off the wall competitors (horse and buggy business and suddenly there is cars sort of thing), satellite imagery of their car parks ( https://www.theatlantic.com/magazine/archive/2019/05/stock-value-satellite-images-investing/586009/ ), have robots read the news to guess price movements (CEO fraud embezzlement, class action... all negative and likely to move stock price down) and so on and so on for the markets the company in an attempt to do better than the others at guessing future moves. All these are considered perfectly normal behaviour. The trouble for insider trading (using information you came by say during the course of your employment that nobody else outside the company knows and is likely to change how the company is perceived) comes in that if it is allowed it will very quickly devolve into only those that have the insider information get to play in the market else they just lose, various investment firms go bankrupt (which means nobody retires), no money gets circulated around the economy beyond what has to be for simple transactions and that is all very bad news for your advanced economy. Or if you prefer then there is a reason it is treated up there with making counterfeit currency and rich and powerful people get nailed for it where they skate on all manner of other nastiness.

Wow, interesting, thanks. Isn't it more about a companies' confidence than economy?

 

[urbanman2004]

Yeah, we all knew he did that sh!t ...

 

[Foxi4]

Or to be the scapegoat to cover and/or run interference for others. "Taking one for the team" is as Japanese as it gets.

You’re not wrong.

 

[FAST6191]

Wow, interesting, thanks. Isn't it more about a companies' confidence than economy?

Even if it was then as the economy is made up of companies if they are all dubious and investment in them near pointless then nothing works.

 

[bigskribbz]

Wow, the creator of Sonic and the creator of Sonichu are both going to be in jail!

Good riddance (for chris chan at least)

 

[OldManLav]

Dude was an arrogant, racist bully throughout his entire tenure at Sega. Once an asshole, always an asshole I suppose.

 

[SecureBoot]

I don't know Japanese proceedings that well (and they are quite different to western courts in many ways) but was this him being tricked into admitting it or how they do plea deals over there?

Much like nobody has quite figured out who makes a film (director, cinematographer, screenplay author, lead actors, dude financing it, UK also seems to recognise composer https://www.gov.uk/copyright/how-long-copyright-lasts ) then I guess we have to have the same debate for games. I would submit that programmer, especially back then, is responsible for much of the feel of the game.

While it is one of those hard to point at an immediate victim crimes if it is allowed to play out again and again soon people lose trust in the stock markets, and at that point your advanced economy is in a lot of trouble (people can't retire because their pension went up in smoke*, nobody invests in more innovative companies, fewer people invest in anything reducing money to play around with in the market. It is up there with printing fake money really for things that can screw up an economy in a hurry, and why rich establishment types do go to jail/get massive fines for it where they are almost untouchable otherwise.

*and as only old people vote the politician that promises to fix that gets himself and his party elected.

In Japanese proceeding, the defendant must be proven innocent in three days. Otherwise, they are automatically deemed guilty. In order to be declared innocent, the defense attorney must provide evidence incriminating another party. If the truly guilty party is not found, the defendant is declared guilty (even if clearly incapable of commiting the crime). Messed up stuff!

 

[Metoroid0]

Besides money, what other reasons are there?

That's what i said... who knows...

 

[such]

In Japanese proceeding, the defendant must be proven innocent in three days. Otherwise, they are automatically deemed guilty. In order to be declared innocent, the defense attorney must provide evidence incriminating another party. If the truly guilty party is not found, the defendant is declared guilty (even if clearly incapable of commiting the crime). Messed up stuff!

Somebody is ending up in the slammer over this, and the justice system isn't really concerned who, eh?

 

[MarkDarkness]

Talentless hack.

 

[Maximumbeans]

There are much worse crimes than insider trading. If I could get away with insider trading, I'd do it in a heart beat.

Same. Do it once, big, with plausible deniability, and live easier from there.

 

[Blue Lamb]

As a weeb magnate, I'm pretty sure I've heard that pleading guilty in Japan lessens the punishment, whether guilty or not.

 

[Archolm]

This is a real shame.