updated 3/13/2006 4:44:46 PM ET 2006-03-13T21:44:46

The Tokyo Stock Exchange said Monday it will stop trading shares in disgraced Japanese Internet startup Livedoor next month because of alleged securities law violations, ending a listing that brought turmoil to the exchange.

The exchange will delist Livedoor Co.’s stock — which has fallen 90 percent in the last two months — from the so-called Mothers market of emerging companies on April 14, following a month on the bourse’s liquidation post, the TSE said in a statement.

The announcement came after Japan’s securities commission filed a criminal complaint against four former Livedoor executives and a current executive on suspicion of doctoring the company’s financial report for the fiscal year to Sept. 30, 2004, in breach of the Securities and Exchange Law.

The commission alleged that the Livedoor executives were involved in window-dressing the company’s pretax profit by about 5.35 billion yen ($45 million) for that fiscal year.

In addition to Livedoor founder and former president Takafumi Horie, 33, the complaint filed with the Tokyo District Prosecutors Office named former executives Ryoji Miyauchi, Fumito Okamoto and Osanari Nakamura, all 38, as well as Fumito Kumagai, 28, a current executive. Prosecutors were expected to indict the five executives on Tuesday, news reports said.

Livedoor’s actions were deliberate, systemic and malicious, TSE Chairman Taizo Nishimuro told reporters late Monday at a televised news conference.

“To deliberately falsify information crucial to investor decision-making is a malicious act, and the fact that this was carried out systemically leads us to strongly suspect the company’s credentials as a publicly listed company,” Nishimuro said.

After the delisting, Livedoor shares won’t be tradable on any exchange because Livedoor lists only in Tokyo. But investors can still receive dividends from the company and could theoretically trade shares through independently negotiated transactions, the bourse said.

Livedoor shares have plummeted by more than 90 percent since early January, when it was trading at close to 700 yen ($6). It finished at 66 yen (56 U.S. cents) on Monday, unchanged from the previous session.

A group of individual investors in Livedoor has already begun discussing how to seek compensation from the company. So far, over 1,000 investors have registered with the group, which was set up in February, according to the group’s Web site.

Livedoor was first raided by prosecutors in early January. Horie and three ex-executives were arrested later that month and indicted on charges of using stock swaps and stock splits to artificially inflate stock prices, and of giving false information about earnings of a subsidiary. Kumagai was arrested in February.

The investigation set off a huge sell-off in the Japanese stock market in mid-January and wreaked havoc with the exchange’s computerized trading system. The bourse has since shortened its afternoon trading session by 30 minutes.

Horie, a brash entrepreneur who became a celebrity in Japan for a number of high-profile corporate takeover attempts, blunt language and flashy lifestyle, has repeatedly denied any wrongdoing.

Following the announcement, Livedoor said it would strengthen internal compliance measures and do its utmost to prevent similar incidents from recurring.

The company also said all three of its board members will step down by the next shareholders’ meeting in June.

The three — Hiroshi Haneda, Livedoor Representative Director Noriyuki Yamazaki, and the arrested Kumagai — will be replaced by five new directors, including current President Kozo Hiramatsu, who is not yet a board member.

Violating securities laws carry a maximum penalty of five years in prison and 5 million yen ($42,000) in fines.

A subsidiary, Livedoor Marketing Co., will also be delisted from the Tokyo exchange on March 14, TSE said.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%
Source: Bankrate.com