Nippon shakedown

Another Livedoor investor arrested

The Livedoor dominos keep falling.

On Monday investment guru Yoshiaki Murakami confessed to insider trading of radio station Nippon Broadcasting System shares at a press conference at the Tokyo Stock Exchange. Later that day he was arrested on suspicion of violating Japanese security laws.

Murakami told reporters that on hearing from Livedoor prexy Takafumi Horie in fall 2004 that Livedoor would continue to buy NBS shares as part of what became a hostile takeover, “I also bought stock.”

The purchases started in late 2004 and continued until early 2005. Murakami also discussed Livedoor’s public tender offer for NBS shares with Livedoor director Ryoji Miyauchi.

The Tokyo District Public Prosecutor’s Office has started questioning Murakami and three execs of his Singapore-based investment fund MAC Asset Management over this insider deal. Murakami signed a statement admitting his violation of the Securities & Exchange Law on Sunday.

A former trade ministry official, Murakami launched a mergers and acquisitions consultancy in 1999. He engaged in a widely publicized and, for Japan, highly unorthodox hostile takeover bid of real estate firm Shoei. In 2003 his investment fund grabbed the second-largest stake in NBS, a subsidiary of the Fuji TV web. In January 2005 Fuji fought back with a tender offer aimed at making NBS a wholly owned subsidiary.

Then in February 2005 Livedoor announced it had acquired a 35% stake in the radio station through off-hours trading. The company is believed to have acquired some of its shares from Murakami.

Livedoor’s takeover bid failed but Fuji ended up buying a 12.75% stake in Livedoor for ¥44 billion ($396 million). In March, the web sold its Livedoor shares to broadband giant Usen for about $85.6 million.

In January, Livedoor prexy Horie and four other Livedoor execs, including Miyauchi, were arrested on charges of falsely stating company earnings. Livedoor’s shares plunged and it was delisted from the TSE in April.

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