TAKAFUMI HORIE, the maverick Japanese entrepreneur arrested last month for misleading the market, was indicted yesterday for violations of Japan’s Securities and Exchange Law.
The 33-year-old, who was forced to resign as president of Livedoor, the internet conglomerate that he founded, was due to be re-arrested with three of the company’s former executives. Livedoor and its affiliate Livedoor Marketing were also indicted and Tokyo Stock Exchange sources told The Times that it was now almost certain that Livedoor’s shares would be de-listed within a week.
As well as destroying Mr Horie’s fortune, such a move would deal a heavy blow to Fidelity and Capital — the powerful institutions that between them own about 13 per cent of Livedoor’s shares.
In strictly limited trading, shares in Livedoor tumbled to an all-time low of 61 yen as the possibility of a swift de-listing sunk in with smaller online investors, who had been voracious buyers of the company’s stock for much of last year.
Investors said yesterday that they were expecting a break-up of Livedoor. At least three companies within the overall group — including the Dynacity real estate giant — have hinted that they will soon sever their tie-ups with the crumbling Livedoor empire.
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Mr Horie, a Tokyo University dropout who used to run his internet empire from one of the most expensive apartments in Tokyo, has spent the past 20 days in a tiny detention cell. Under Japanese law, the police had to release him yesterday. Re-arrest gives the authorities a further three weeks to question him.
Mr Horie and his fellow former executives each face five years in prison and fines of up to five million yen (£24,000) if found guilty of the charges. “During the court proceedings, we will clarify that the key to Livedoor’s rapid growth was criminal acts that interfered with fair trade in securities,” the Tokyo District Prosecutor’s Office said in a statement.
Mr Horie has consistently denied accusations that he falsely inflated the profits of one of Livedoor’s subsidiaries and seeded the market with bogus takeover rumours.
The Livedoor indictments took place on a miserable day for Tokyo stocks, in which the Nikkei 225 Index plunged more than 380 points, or 2.34 per cent, to below the 16,000 level for the first time in a fortnight. The sell-off was blamed partly on fears that the Bank of Japan may end its ultra-loose monetary policy. There were also fears among domestic investors that foreign capital may be pulled out of the Japanese market. Last week a strategy note published by Morgan Stanley, the American investment bank, advised global investors to shift their funds from the Japanese market to the United States.