Japan's best-known fund manager, Yoshiaki Murakami, was arrested 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.
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 Internet firm 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.
The fund recently has been under media scrutiny for accumulating a 47 percent stake in major Japanese railroad company Hanshin Electric Railway Co.
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. The ruckus over Hanshin illustrates Murakami's negative image among some in Japan's business community and the mainstream media.
Insider trading carries a maximum penalty of up to three years in prison and a fine of up to 3 million yen nearly ($27,000), upon conviction.
Attempts to contact other MAC Asset Management officials were unsuccessful.