Sonic co-creator pleads guilty to insider trading during time at Square Enix

Sonic the Hedgehog co-creator Yuji Naka has pleaded guilty to charges of insider trading while working at Square Enix.

The 57-year-old was arrested in November 2022 and has been standing trial at the Tokyo District Court, charged with violating Japan’s Financial Instruments and Exchange Act. 

Using insider information from Square Enix, Naka learned that Japanese game company Aiming was developing a new mobile game called Dragon Quest Tact before it was officially announced. 

Betting on the popularity of the Dragon Quest franchise, Naka invested in 10,000 shares of Aiming stock for around ¥2.8 million ($20,000). His intention was to sell them later when Aiming officially announced the game, resulting in the increased valuation of the company’s stock price.

Naka was arrested again in December 2022 in a separate Square Enix financial scandal. This time, he was accused of conducting insider trading using Square Enix’s confidential information for another popular game called Final Fantasy VII: The First Soldier. It was developed by ATeam Entertainment.

During the trial, the prosecutor accused Naka of accessing a website containing confidential materials and minutes of investment meetings. It allowed him to learn about the joint development of the upcoming Final Fantasy and Dragon Quest games before they were officially announced.

With this information, Naka invested in 130,000 shares (10,000 of Aiming and 120,000 of ATeam Entertainment) which yielded a profit of over ¥20 million ($146,000) after selling.

According to TBS News Dig, Naka pleaded guilty to these charges. “There is no doubt that I found out about the games before they were made public and bought shares in them,” he said.

Naka worked for Square Enix from 2018 to 2021. He was also one of the co-creators of Sonic the Hedgehog and played a key role in making the franchise a success worldwide.

Two former Square Enix employees, Taisuke Sazaki and Fumiaki Suzuki, have also been arrested in this insider trading case. There have been no recent updates regarding their trial yet.