Japanese fund manager Yoshiaki Murakami, arrested on suspicion of insider trading in a deal involving scandal-hit Internet firm Livedoor Co., speaks to reporters at the Tokyo Stock Exchange in Tokyo June 5, 2006.(Xinhua/Reuters)

    BEIJING, June 6 -- Star Japanese fund manager Yoshiaki Murakami was arrested yesterday after admitting to insider trading, in the latest fall-out from a scandal surrounding the once high-flying Internet firm Livedoor.

    Murakami, known for aggressively squeezing corporate value out of the firms that he targets, said in an emotionally charged news conference before his arrest that he would resign immediately from his US$3.6 billion investment fund.

    But the former trade bureaucrat insisted that he was proud of his achievements and lashed out at Japan Inc as hostile to those who challenged the system.

    "This time I got a red card. I am going to leave the pitch once and reflect," he told more than a hundred reporters who packed a small room at the Tokyo Stock Exchange.

    "I hope Japan will one day become a country that accepts people who challenge the status quo."

    Murakami, 46, and 33-year-old Livedoor CEO Takafumi Horie had become symbols of a more free-wheeling style of capitalism that is gradually taking hold in Japan.

    Both had been praised for rejecting entrenched corporate customs that put managers' interests ahead of those of shareholders. But they also came under fire for their aggressive and undisguized pursuit of profits.

    Murakami's arrest could cloud Japanese markets by raising fears that other investors will shy away from aggressive takeovers or demands to change the way companies are run.

    TV networks broadcast the news conference live as news helicopters circled overhead, trailing Murakami to and from the stock exchange.

    Veering between bashful self-criticism and angry denials that he had knowingly broken the law, Murakami said he was surprised when prosecutors accused him of trading on advance knowledge of a high-profile takeover bid launched by Livedoor last year.

    But he said that he had concluded after talks with the prosecutors that some of his conversations with Livedoor executives could be interpreted as breaking securities laws.

    "Rather than spend two years fighting about it in court, I decided the best thing would be to agree with the prosecutors," he said.

    He faces up to three years in prison or a fine of up to 3 million yen (US$26,890).

    Horie and other Livedoor executives were arrested in January and have been charged with securities law violations in a separate business deal. Horie has denied any wrongdoing.

    Murakami said Horie and another Livedoor official told him in late 2004 that they hoped to launch a takeover bid for Nippon Broadcasting System Inc (NBS), a radio broadcaster in which Murakami's fund owned shares.

    NBS's stock price surged after Livedoor launched its bid last February. The fund, which accumulated more shares in the months before the bid, sold its stake at a profit to Livedoor and to market investors.

    "I didn't think Livedoor had the wherewithal to actually go through with it," Murakami said of his initial conversation with the Livedoor executives. "I didn't buy the (NBS) shares because of it, but it's true that I heard what I heard."

    Livedoor ultimately withdrew its bid for NBS after a bitter fight that shook corporate Japan. It settled for a deal that gave control to Fuji Television Network Inc, an NBS affiliate that was fighting Livedoor for control of the firm.

    Murakami acknowledged that he had continued to discuss business matters including NBS with Horie on an informal basis.

    "We saw each other at the gym, so of course we chatted."

    Murakami said he would not return to the world of securities trading.

    His fund, which is now based in Singapore and draws about 60 per cent of its money from US university endowments, has doubled in size since its inception and is now worth around 400 billion yen (US$3.6 billion), he said.

    Only about a third of the fund's cash has been invested, with the rest sitting on its books as cash. It will continue to operate despite his resignation, he said, although it may shrink as some investors pull out.

(Source: China Daily)