Former SMBC Nikko managers found guilty in market manipulation case
The Tokyo District Court handed down suspended prison sentences for the firm's ex-head of equity Trevor Hill and his deputy Alexandre Avakiants, as well as three Japanese former executives. Prosecutors had sought multiyear prison terms for their alleged roles in trying to support stock prices ahead of what are known as block trades.
When the allegations surfaced in early 2022, they shone a spotlight on Japan's financial sector and led to regulatory penalties against the brokerage. The subsidiary of Sumitomo Mitsui Financial Group, Japan's second-largest banking group, posted losses and cut costs in the wake of the revelations as clients took their business elsewhere. The firm's top executives took pay reductions to shoulder responsibility.
Former general manager Makoto Yamada was sentenced to three years' imprisonment, suspended for five years, the court ruled on Tuesday. Hill and ex-deputy president Toshihiro Sato received two and a half years, suspended for five years. Another former general manager, Shinichiro Okazaki, and Avakiants got shorter suspended sentences.
The case underscores the legal risks for foreign professionals working in Japan. The country's justice system has faced criticism for its conviction rate of more than 99%, suggesting to organizations including Human Rights Watch that trials are practically foregone conclusions.
Still, criminal proceedings against foreign business executives are relatively rare in Japan. The most high-profile case in recent years was against Carlos Ghosn, the former Nissan Motor chairman, who was accused of financial misconduct and fled the country before he was tried.
It has been more than two and a half years since prosecutors brought charges against the former SMBC Nikko managers and the firm. Ex-manager Teruya Sugino received a suspended prison sentence in 2023 after admitting to the accusations. SMBC Nikko itself pleaded guilty.
SMBC Nikko resumed block offers in April after renaming them retail offers and introducing a tighter internal monitoring of the transactions.
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From China's assertive military expansion and "gray zone" tactics in the East and South China Seas, particularly around the Senkaku Islands and Taiwan, to North Korea's relentless pursuit of nuclear and ballistic missile capabilities, the Indo-Pacific is increasingly volatile, all part and parcel of an international system that is rapidly evolving from X to Y. Given the scope and scale of these challenges, we cannot afford complacency. It is imperative that Washington and Tokyo accelerate our joint development of next-generation defense technologies -- AI-enabled command systems, autonomous platforms, cyber defense -- and fast-tracking the co-development and deployment of advanced technologies, strengthening integrated air and missile defense systems, and ensuring seamless interoperability of our forces across all domains. This will help the alliance to deter aggression and operate effectively in an era defined by multi-domain conflict. 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Japan's extensive development networks and America's innovation ecosystem can be combined to offer a robust alternative to China's Belt and Road. To meet the test of this moment, the U.S.-Japan alliance must become more than a security arrangement. It must be a platform for shared strategy, innovation, and governance in the Indo-Pacific. The future of the U.S.-Japan alliance hinges on our willingness to confront the present with clear eyes and bold action. This isn't a moment for nostalgia; it's a demand for strategic reimagining. We must move beyond outdated notions of stability and influence to rebuild an alliance fit for a fragmented and fast-moving world. This means prioritizing investment beyond military modernization to include the governance of emerging technologies. It requires us to fully integrate climate adaptation and economic competitiveness as core pillars of national security. 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