Leading Japanese investor arrested for insider dealing

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The Independent Online

Yoshiaki Murakami, one of Japan's star fund managers and the country's leading activist shareholder, was under arrest last night after admitting insider trading.

Prosecutors in Tokyo are investigating whether the 46-year-old traded in Nippon Broadcasting System shares last year, knowing that Livedoor was planning a hostile bid.

His arrest comes four months after Livedoor's flamboyant founder and chief executive, Takafumi Horie, and other executives at the internet company were arrested in an unrelated fraud case. Mr Horie denies any wrongdoing.

Mr Murakami, a former trade bureaucrat, resigned yesterday from his $3.6bn (£1.9bn) investment fund and vowed never to return to the world of trading.

He told a press conference: "This time I got a red card. It's my fault, I broke the law. I am going to leave the pitch once and reflect. I hope Japan will one day become a country that accepts people who challenge the status quo."

Mr Murakami said Mr Horie and another Livedoor official told him late in 2004 that they hoped to bid for NBS, a radio broadcaster in which his fund held shares.

In the months before the bid, Mr Murakami's fund picked up more NBS shares before selling the stake to Livedoor and other investors for a profit.

Both Mr Murakami and Mr Horie, 33, were at the forefront of a new group of dynamic young executives challenging the status quo within conservative corporate Japan. They won praise for putting shareholders' interests above managers' and became emblematic of a more entrepreneurial style of capitalism.

Mr Murakami faces up to three years in prison or a maximum fine of 3 million yen (about £14,300). If found guilty, Mr Horie faces up to five years in prison.

Last year, Japanese prosecutors pushed for a three-year jail term for Yoshiaki Tsutsumi, the former chairman of Seibu Railway and one of the world's richest men, for insider trading and falsifying shareholder records. He received a 30-month suspended sentence and a ¥5m fine.

Mr Murakami started his MAC Asset Management fund in 1999, and used his investments to force change at companies such as Hanshin Electric Railway, Tokyo Style and the operator of the Osaka stock exchange.

The fund, which has headquarters in Singapore, draws about 60 per cent of its investments from American university endowments. It will continue to operate, despite Mr Murakami's resignation. Mr Murakami was born in Japan's second city, Osaka. He reportedly made his first investment aged nine after his father gave him ¥1m. He bought shares in the Japanese brewer, Sapporo, because of his father's preference for that brand of beer.