Yuji Naka was reportedly arrested as part of Square Enix’s insider trading investigation

Former Sonic team leader and Sonic the Hedgehog programmer Yuji Naka has been reportedly arrested in connection with Square Enix’s ongoing insider trading investigation.

Japanese news site FNN Prime Online reports that Naka is now the latest suspect in an insider trading case surrounding a new Dragon Quest game.

On Thursday, two former Square Enix employees were arrested in Tokyo as part of alleged insider trading.

Taisuke Sazaki and Fumiaki Suzuki were arrested for acquiring shares in Japanese developer Aiming just before it was revealed he was working on a new Dragon Quest game.

The two reportedly bought around 47 million yen ($336,300) worth of Aiming stock just before it was publicly confirmed that the company was developing mobile title Dragon Quest Tact.

Now, according to FNN, the Tokyo District Procuratorate’s Special Investigation Branch has also arrested Naka for a similar possible violation.

It is alleged that Naka – who was working on Balan Wonderworld for Square Enix at the time – bought about 10,000 Aiming shares for around 2.8 million yen ($20,000) prior to the Dragon Quest Tact announcement.

By buying the stock prior to the announcement, there is an assumption that all three suspects may have knowingly used inside information to later resell the stock when its value has increased.

Following the arrest of the two original suspects, Square Enix issued a statement confirming that the two were former employees and saying it was cooperating with authorities in the investigation.

“Today, some media outlets reported that former Square Enix employees are under investigation on suspicion of insider trading,” the statement said.

“We have fully cooperated with inquiries from the Securities and Exchange Surveillance Commission. Since the investigation by the Tokyo District Procuratorate is ongoing, we will continue to fully cooperate with the investigation.

“We deeply regret the great concern this has caused to all concerned. We have dealt with this incident rigorously, including taking internal disciplinary action against the suspected employees.”

Square Enix is ​​Yuji Naka’s former employer, where he ran the critically failed Balan Wonderland before retiring from the company last year.

However, development on Balan went so poorly that Naka later sued Square Enix, claiming he was removed from the project six months before release.

Naka first spoke out against the development of Balan Wonderworld in an explosive series of tweets in April.

“Game developers should improve their games to the end, and I believe preventing them from achieving that goal is wrong,” Naka wrote in April, translated by VGC.

“I have asked my attorney to negotiate with our business partners so that I can at least address issues with the development of Balan Wonderworld until the end, but they ignored my requests, so I ultimately decided to file a lawsuit in court.

“Because of this, Balan Wonderworld received all the criticism and comments that you all know well,” he claimed. “It’s quite unfortunate that a project I’ve managed from the start has turned out this way.

“Personally, I think it’s a real shame that Balan Wonderworld was released in the state it was. I wanted to show the world an action game in its proper light. So I believe Square Enix and Arzest are companies that don’t care about games or their fans.”