Livedoor case claims another

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TOKYO -- Toshiaki Murakami, former director of the Murakami Fund, was sentenced to two years in jail by a Tokyo District Court on Thursday, fined a maximum ¥3 million ($25,000) and ordered to pay a record surcharge of ¥1.15 billion ($9.4 million) for illegal stock deals.

The charges relate to insider trading on the hostile takeover bid by Takafumi Horie's Livedoor for Nippon Broadcasting System, a subsidiary of Fuji Television Network, at the end of 2004.

The Murakami Fund (MAC Asset Management) was established in 1999 as a specialist in mergers and acquisitions, gaining a reputation as a ruthless operator in the normally staid Japanese corporate world.

Murakami, a former trade and industry ministry official, and Horie, a Tokyo University dropout, were held up as symbols of a new aggressive style of entrepreneurship, shaking up the business Old Guard and becoming role models to the young.

"Murakami and Horie certainly used to be symbols of a new way in Japanese business and investing, but now that all their 'under the table' activities are very much 'on the table.' That's all over," the director of an economic research unit in Tokyo commented.

Prosecutors argued that Murakami had learned in advance about the Livedoor bid for NBS at a meeting with Horie's management team in November 2004. His fund went on to buy nearly ¥10 billion ($82 million) of stock in NBS before the bid was launched, pocketing a profit of about ¥3 billion ($25 million) by selling them once the ultimately unsuccessful takeover battle was underway.

At the time of Murakami's arrest last June, he appeared to be taking the traditional Japanese route of confessing and apologizing. "I admit my crime and will accept the blame," he was quoted as saying at the time. However, by the time he got to trial he had changed his mind and entered a "not guilty" plea.

Horie was convicted on a separate charge of cooking Livedoor's books to boost its share price and sentenced to two and a half years imprisonment in March.

The anti-establishment stance of both Horie and Murakami, along with the refusal of both men to toe the line and plead guilty, is likely to have led to the custodial sentences that haven't been handed down to others convicted of similar offenses.
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