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Scandal at Japanese brokerage widens with executive’s arrest

March 24, 2022 GMT
FILE - People are reflected on a blank electronic stock board supposedly showing Japan's Nikkei 225 index at a securities firm Thursday, Oct. 1, 2020, in Tokyo. The scandal at a top Japanese brokerage widened as the vice president of SMBC Nikko Securities was arrested Thursday, March 24, 2022, and the company was charged with stock manipulation. (AP Photo/Eugene Hoshiko, File)
FILE - People are reflected on a blank electronic stock board supposedly showing Japan's Nikkei 225 index at a securities firm Thursday, Oct. 1, 2020, in Tokyo. The scandal at a top Japanese brokerage widened as the vice president of SMBC Nikko Securities was arrested Thursday, March 24, 2022, and the company was charged with stock manipulation. (AP Photo/Eugene Hoshiko, File)
FILE - People are reflected on a blank electronic stock board supposedly showing Japan's Nikkei 225 index at a securities firm Thursday, Oct. 1, 2020, in Tokyo. The scandal at a top Japanese brokerage widened as the vice president of SMBC Nikko Securities was arrested Thursday, March 24, 2022, and the company was charged with stock manipulation. (AP Photo/Eugene Hoshiko, File)
FILE - People are reflected on a blank electronic stock board supposedly showing Japan's Nikkei 225 index at a securities firm Thursday, Oct. 1, 2020, in Tokyo. The scandal at a top Japanese brokerage widened as the vice president of SMBC Nikko Securities was arrested Thursday, March 24, 2022, and the company was charged with stock manipulation. (AP Photo/Eugene Hoshiko, File)
FILE - People are reflected on a blank electronic stock board supposedly showing Japan's Nikkei 225 index at a securities firm Thursday, Oct. 1, 2020, in Tokyo. The scandal at a top Japanese brokerage widened as the vice president of SMBC Nikko Securities was arrested Thursday, March 24, 2022, and the company was charged with stock manipulation. (AP Photo/Eugene Hoshiko, File)

TOKYO (AP) — The scandal at a top Japanese brokerage widened as the vice president of SMBC Nikko Securities was arrested Thursday and the company was charged with stock manipulation.

The arrest of Toshihiro Sato on charges of violating securities regulations followed arrests earlier this month of four other employees of the Tokyo-based company on the same charges.

The company and some employees are accused of propping up stock prices by putting in massive buy orders, prosecutors said.

Those arrested earlier denied wrongdoing, saying they were just carrying out normal procedures, according to Japanese media reports.

Sato’s comments were not immediately available, but the arrest highlights how Tokyo District Prosecutors suspect the top echelons of the company were involved in unlawful stock dealings.

SMBC Nikko did not return calls requesting comment. The company’s CEO Yuichiro Kondo apologized at a news conference earlier this month about the scandal. He said the company was investigating internally to prevent a recurrence.

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The latest arrest comes after the Securities and Exchange Surveillance Commission, the government body overseeing stock transactions, filed formal accusations against SMBC Nikko and its workers.

Upon conviction, violation of the Financial Instrument and Exchange Act carries a maximum penalty of 10 years in prison, a 10 million yen ($82,000) fine, or both. A company faces a fine of up to 700 million ($5.8 million).

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama