Yuji Naka gets a $1.2 million fine and a suspended prison sentence for insider trading

The developer will go to jail if he breaks the terms of the order over the next four years

Sonic the Hedgehog co-creator Yuji Naka has been found guilty of insider trading, but will avoid prison for now.

As reported by Japanese news agency Jiji Press, the Tokyo District Court ruled that Naka had violated Japan’s Financial Instruments and Exchange Act, by illegally buying shares based on inside information.

The judge sentenced Naka to 30 months in prison, suspended for four years. This means Naka will escape a prison term as long as he adheres to the conditions set by the order and doesn’t infringe on any further terms or laws during this time.

However, Naka also received two fines totalling ¥173 million ($1.2 million), meaning that although he may not have to go to prison for his part in the insider trading scheme, he will certainly pay a substantial financial penalty.

Naka pled guilty to the charges in March, saying that there was “no doubt” he was guilty in taking part in the insider trading scheme.

After his arrest in November 2022, it was claimed that Naka – who was working on Balan Wonderworld for Square Enix at the time – was made aware that Japanese developer Aiming was working on a new Dragon Quest mobile game called Dragon Quest Tact before it was officially announced.

He then reportedly bought approximately 10,000 shares of Aiming stock for around ¥2.8 million ($20,000), with the intention of selling them once the game was announced and Aiming’s stock value had increased.

Naka was arrested for a second time in December 2022, relating to allegations that he had carried out similar insider trading after learning confidential information that Square was planning to make Final Fantasy VII: The First Soldier with mobile developer ATeam Entertainment.

It was claimed that Naka accessed a website containing materials and minutes of investment meetings and learned of the existence of the joint development of the new Final Fantasy and Dragon Quest games. Then, armed with this knowledge, it’s claimed he bought 130,000 shares, and earned a profit of over ¥20 million ($146,000) upon their sale.