Business

Japan Fund Manager Admits Insider Trading

TOKYO (AP) ― Japan's best-known fund manager, Yoshiaki Murakami, was arrested Monday for alleged insider trading in a case that is drawing intense attention in a nation where aggressive investment funds are still relatively rare.

Murakami, president of MAC Asset Management, widely known as Murakami Fund, acknowledged earlier Monday he had engaged in insider trading.

Authorities arrested Murakami on Monday afternoon for alleged violations of Japan's Securities Laws, the Tokyo District Prosecutors office said in a statement. Investigators have also raided the Tokyo headquarters of MAC Asset Management and other related properties, the statement said.

Unease about the scandal rattled Tokyo's stock market, where the Nikkei 225 dropped 121 points, or 0.77 percent, to 15,558.31 points. However, several of the companies in which the Murakami fund holds a major stake — Matsuzakaya Co., Sumitomo Warehouse Co., and New Japan Radio Co. — rose after falling sharply Friday.

Anxious to avoid the kind of sell-off that hit stocks in January during the investigation and arrest of top executives of Internet startup Livedoor Co., Economy and Banking Minister Kaoru Yosano sought to calm investors.

"This kind of affair will certainly have some impact on stocks, but Tokyo's financial markets are deep so the impact will be limited," Yosano told reporters at a briefing.

Prosecutors and the Securities and Exchange Surveillance Commission suspect that his Murakami Fund bought a large quantity of shares in Nippon Broadcasting System Inc. last year based on advanced knowledge that Livedoor Co. would make a takeover bid for the company.

Murakami denied in a nationally televised news conference Monday that he intended to commit a crime when he bought a large number of Nippon Broadcasting System Inc. shares with advance knowledge that Internet startup Livedoor Co. would make a takeover bid for the radio network.

He said he chanced upon that information and was not fully aware that his actions may have constituted insider trading.

"I didn't intend to commit a crime," Murakami said. "I made a mistake."

Murakami, a 46-year-old former government bureaucrat, rose to fame as an outspoken proponent of investor rights and free markets. But he was widely viewed with suspicion by many among the old-guard business establishment as just being out for money and representing dubious foreign investors, and not interested in proper Japanese management practices.

Murakami said Monday he had signed a document with Tokyo prosecutors admitting wrongdoing, and he expected to be charged. He also said he was stepping down as fund manager although his fund will continue to operate.

Livedoor executives, including its flamboyant former president, Takafumi Horie, are embroiled in a separate criminal case, centered on falsifying its own earnings reports and those of a subsidiary. Horie was arrested earlier this year on charges of violating securities exchange regulations.

The Murakami Fund bought a large stake in Nippon Broadcasting shortly before Livedoor and Fuji Television Network Inc. launched a heated takeover battle for the radio broadcaster.

Livedoor bought Nippon Broadcasting shares from other investors in off-hours trading last year, raising its stake to 35 percent from about 5.4 percent. The Murakami Fund is believed to have sold part of its stake to Livedoor, reaping hefty gains, media reports say.

Last week, a rival railroad, Hankyu Holdings Inc., offered to buy out Hanshin, apparently in reaction to fears that Hanshin will get taken over by Murakami.

Murakami's purchase of Hanshin shares has received intense media scrutiny. The ruckus illustrates his negative image among some in Japan's business community and mainstream media.

Hanshin Electric Railway Co., in which the Murakami Fund holds a 46.8 percent stake, finished unchanged at 931 yen ($8.34).

Insider trading carries a maximum penalty of up to three years in prison and a fine of up to 3 million yen ($26,860), upon conviction.

Attempts to reach other MAC Asset Management officials for comment were unsuccessful.

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