SMBC Nikko deputy president arrested over market manipulation

A deputy president of SMBC Nikko Securities Inc. was arrested by the special investigation squad of the Tokyo District Public Prosecutors Office on Thursday over alleged stock price manipulation.

Toshihiro Sato, 59, is charged with violating the financial instruments and exchange law over his suspected involvement in the manipulation of stock prices conducted by employees of the Sumitomo Mitsui Financial Group Inc. unit.

Also on Thursday, the special squad indicted SMBC Nikko and five people over the incident, including Makoto Yamada, 44, former head of the company’s equity trading section, and Senior Managing Executive Officer Trevor Hill, 51.

Sato was in charge of the equity department, which oversees all block trading deals, at the time of the alleged market manipulation. He is believed to have received reports from Yamada and others about the fraudulent transactions.

Prosecutors believe that buy orders in the manipulation scheme were carried out with Sato’s consent.

He is suspected of colluding with Yamada and others to place many buy orders to maintain the stock price of a company listed on the Tokyo Stock Exchange’s first section at around ¥6,600 on April 8, 2021.

The action was done in a block trading deal in which the securities company bought shares from a major shareholder outside the market for sale to investors.

Sato is originally from Sumitomo Mitsui Banking Corp., the core entity in the megabank group. He has been serving as an executive at SMBC Nikko since May 2019 and is also managing executive officer at Sumitomo Mitsui Financial Group.

The equity department oversees the equity trading section, which trades stocks with company funds, and the global financial products and solution section, which offers block trading to investors.