Fund chief is arrested in continuing Livedoor scandal

A leading shareholder activist in Japan has been arrested after being drawn into the Livedoor scandal rocking the country this year, prosecutors say.

Fund manager Yoshiaki Murakami had said he had unwittingly violated insider trading laws in connection with a takeover initiated by Livedoor in 2005.

The former trade ministry official also said he would resign from his fund.

The arrest relates to his fund’s purchase of Nippon Broadcasting shares from late 2004 to early 2005.

Authorities arrested Mr Murakami for alleged violations of Japan’s securities laws, the Tokyo District Prosecutors office said.

Investigators also raided the Tokyo headquarters of his fund MAC Asset Management and other related properties, a statement said.

Economy minister Kaoru Yosano said: “This kind of affair will certainly have some impact on stocks, but Tokyo’s financial markets are deep so the impact will be limited.”

In a separate case, four former executives of internet firm Livedoor are on trial in Tokyo charged with falsifying corporate accounts.

The Livedoor affair shook markets early this year and put the spotlight on its former president, Takafumi Horie, who had gained fame in Japan for shaking up the somewhat conservative business environment.

Mr Horie is set to stand trial later this year on charges of breaking securities laws.

Investigators probing Mr Horie then turned their attention to stock purchases where Mr Murakami appeared to act on inside information ahead of a Livedoor bid offer for Nippon Broadcasting.

Mr Murakami, 46, is Japan’s best-known fund manager, and is at the forefront of shareholder activism.

But on Monday he admitted his actions could be interpreted as having violated securities trading laws.

“I consider myself a pro among pros, but I had to consider the outside possibility that I had made a mistake,” he told reporters at the Tokyo Stock Exchange.

“I have decided that I have to meekly admit my wrongdoing.”

Mr Murakami moved the headquarters of his fund, formally known as MAC Asset Management, to Singapore in March.

The fund, widely known as the Murakami Fund, is a major shareholder in more than 30 listed firms. It was established in 1999, when Mr Murakami retired from the-then International Trade and Industry Ministry.

The MAC fund has been at the forefront of numerous bid battles and company restructurings in Japan in recent years.

Societe General Asset Management senior economist Akio Yoshino said the new development “casts uncertainty over the prospects for the investment stance of foreign investors who had already turned active sellers”.

When rumours of Mr Murakami’s actions circulated on Friday there was selling of shares in firms in which his MAC fund invested.