Jiji Press reported on Friday that a Tokyo court handed down a sentence of 2.5 years in prison, suspended for four years, to game programmer and director Yuji Naka (57) for violating the Financial Instruments and Exchange Act. (If Naka remains in good behavior for four years, he will not serve time in prison.)
Additionally, Naka was fined 2 million yen, with an additional penalty of 171 million yen, for a total of 173 million yen (about US$1.21 million). (Note: Jiji Press notes the additional penalty as 171 million yen, while TBS notes the additional penalty as 170 million yen.)
The prosecution in the insider trading case recommended in June that Naka serve 2.5 years in prison and pay a 2.5 million yen fine in addition to a 170 million yen penalty, for a total of 172.5 million yen.
The prosecution stated in a Tokyo district court in June that Naka “had no feelings of remorse” for the crime and “committed the crime with clear malicious intent.”
The defense on the other hand is pushed for a reduction in the fine and a suspended sentence. Naka himself apologized, stating he was sorry for “harming the fairness and credibility of the marketplace.”
Naka admitted to the charges against him of violating the Financial Instruments and Exchange Act in his first trial hearing in a Tokyo district court in March.
The prosecution said in an opening statement that Naka allegedly bought 130,000 shares and made 20 million yen (about US$146,600) in profits after finding out about upcoming new games in the Dragon Quest and Final Fantasy series.
The Tokyo District Public Prosecutors Office first arrested Naka on November 18 on suspicion of insider trading. The arrest was connected with the arrests of former Square Enix employee Taisuke Sasaki and his acquaintance Fumiaki Suzuki. Sasaki and Suzuki allegedly invested in the company aiming after they learned that it was developing the Dragon Quest Tact smartphone game in collaboration with Square Enix.
The same prosecutors office arrested Naka a second time on December 7, on suspicion of insider trading, or buying/selling stock on the basis of nonpublic information. While still at Square Enix, Naka allegedly invested in Ateam, developers of the company’s Final Fantasy VII The First Soldier mobile game, prior to the game’s announcement. Former Square Enix employee Taisuke Sasaki was also once again arrested for the same reason. They are suspected of purchasing about 120,000 shares of Ateam for about 144.7 million yen (about US$1 million). (The Tokyo District Court found Sasaki guilty of insider trading and handed him a suspended 3-year prison sentence and a 180 million yen fine in June.)
Naka joined Square Enix in January 2018, and resigned from the company at the end of April 2021. He had stated at the time that he could not explain the reason for the resignation, but would talk about it publicly when the time came. Naka revealed in April 2022 that he had filed a lawsuit against Square Enix for supposedly removing him as the director of the Balan Wonderworld game six months before the game launched.
Naka worked for 22 years at Sega. He is the former head of the Sonic Team and lead programmer of the original Sonic the Hedgehog games for Sega Genesis. He also worked on such games as Nights into Dreams and Phantasy Star Online while at Sega.
Naka is the president and CEO of the PROPE game development company, which he founded in 2006 after leaving Sega. At PROPE, he worked on such games as Fishing Resort, Buddy Monster, and Legend of Coin.