Japanese fund manager arrested in Livedoor fallout

Star Japanese fund manager Yoshiaki Murakami was arrested yesterday on suspicion of insider trading as part of the continuing fallout from a scandal surrounding once high-flying internet firm Livedoor.

Mr Murakami, known for squeezing corporate value out of the firms that he targets, admitted to the charges in a nationally televised news conference and said he would resign immediately from his $3.6 billion (€2.8 billion) investment fund.

Mr Murakami, 46, and 33-year-old Livedoor chief executive Takafumi Horie had become symbols of the more free-wheeling style of capitalism that is gradually taking hold in Japan.

Both had been praised for challenging entrenched corporate customs that put shareholder value behind protecting management and employees. But they also came under fire for their aggressive and undisguised pursuit of profits.

Mr Murakami said he was surprised when prosecutors accused him of trading on advance knowledge of a high-profile takeover bid launched by Livedoor boss Mr Horie last year, but concluded after reviewing his actions that they could be interpreted as breaking securities laws.

"Rather than spend two years fighting about it in court, I decided the best thing would be to agree with the prosecutors," he said.

"I consider myself a pro among pros in this securities market. I had to consider the outside possibility that I had made a mistake." Mr Murakami faces up to three years in prison or a fine of up to 3 million yen (€20,700).

Mr Horie and other executives were arrested in January and have been charged with breaking securities laws in a separate business deal. He has denied wrongdoing.

Mr Murakami said Mr Horie and another Livedoor executive told him in late 2004 that they hoped to launch a takeover bid for Nippon Broadcasting System (NBS), a radio broadcaster affiliated with Japan's largest private media group in which Murakami's fund owned shares.

Shares in NBS surged after Livedoor launched its bid.