Sonic the Hedgehog co-creator Yuji Naka pleads guilty to insider trading

He bought shares in a studio before a big project became public knowledge.

REUTERS/Kim Kyung-Hoon

Yuji Naka has pleaded guilty to insider trading charges filed last fall. The Sonic the Hedgehog co-creator has admitted to violating Japanese financial law by buying shares in the game studio Aiming before its team-up with Square Enix on Dragon Quest Tact became public. Naka admitted to making a profit over 20 million yen (about $150,000) after selling his investment. He hasn't yet received a penalty for the illegal trade.

The veteran developer signed on with Square Enix in 2018, but abruptly left soon after his one project at the company (the mobile platformer Balan Wonderland) shipped to customers. He sued the company for removing him as director of Balan six months before launch. He was still with Square Enix when he heard about the Dragon Quest Tact work.

Two other former employees, Taisuke Sasaki and Fumiaki Suzuki, were also arrested for buying Aiming shares using insider knowledge. Square Enix says it's cooperating with investigators and has established a system that prevents insider trading. It's not clear how well that protection will work in practice, but the guilty plea theoretically discourages developers from using industry secrets to manipulate the stock market.