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Japan Financier Murakami Jailed for Insider Trade

Financier Yoshiaki Murakami, who shook up corporate Japan with demands for greater returns for shareholders, was jailed for two years on Thursday after being found guilty of insider trading.

Murakami was also fined a record 1.2 billion yen (US$10 million) and his now defunct fund was fined 300 million yen.

The bureaucrat turned shareholder activist, who terrified corporate executives until his arrest in June last year, was wearing a dark grey suit and a white shirt for the verdict at Tokyo District Court. He sighed as he took his seat and closed his eyes while the judge read the
sentence.

Murakami, who had pleaded not guilty, traded shares with prior knowledge of a February 2005 takeover bid by Internet firm Livedoor for radio operator Nippon Broadcasting System (NBS), prosecutors said.

He bought 10 billion yen worth of additional NBS shares prior to the failed bid, which drove up the share price, yielding him a hefty profit, they said.

Murakami, 47, was known for buying stakes in companies and pressuring them to cede more power to shareholders.

He and Livedoor's flamboyant founder, Takafumi Horie, gained fame as symbols of a buccaneering style of capitalism that some welcomed but others criticised as un-Japanese.

Horie was found guilty and sentenced to 2-½ years in prison in March for his role in a securities fraud at Livedoor. "I take pride in my actions, which show how capital markets, including management-shareholder relations, should be," Murakami told the court when arguing his innocence in June.

During the trial, Murakami said he had not believed Livedoor had enough money to fund the TBS takeover.

His now-defunct fund, MAC Asset Management, worth 444 billion yen at the time of his arrest, bought stakes in companies sitting on large piles of cash, pressing them to raise dividends or use their funds in aggressive investments.

The fund's targets included railway operators Hankyu Holdings and Hanshin Electric Railway and the Osaka Securities Exchange.

His actions were criticised for causing speculation among investors, who tried to guess where Murakami was investing. In June 2006, regulators tightened reporting rules and obligated investors to report newly acquired shareholdings of 5% or more within two weeks.

Murakami's arrest caused ripples in Japan's markets and establishment. Investors in his fund included Bank of Japan Governor Toshihiko Fukui before he took over at the central bank.

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