The Tokyo High Court on Tuesday upheld fund manager Yoshiaki Murakami’s two-year prison term for insider trading but suspended it for three years, calling the original ruling too harsh.
The high court also upheld Murakami’s ¥3 million fine and a record surcharge of ¥1.15 billion but reduced to ¥200 million the penalty against his former investment advisory fund, MAC Asset Management Inc., down from the ¥300 million imposed by the Tokyo District Court.
Murakami, 49, filed an immediate appeal. He was convicted by the district court in July 2007 of using inside information obtained from Livedoor Co. to trade in shares of Nippon Broadcasting System Inc.
He claimed his innocence throughout the trial and said the high court’s decision was far from acceptable.
The lower court handed Murakami what was considered harsh punishment for insider trading, which usually draws a suspended prison term. The high court apparently took into consideration that Murakami’s trading was partly based on his exercising shareholder rights.
“There is no doubt that the defendant is to be blamed for this particular case, where he manipulated the stock market, and it was both an act of betrayal for those involved and one condemned by society,” presiding Judge Hiroshi Kadono said.
“However, there is still a lack of thorough discussion in our financial culture about how to evaluate the other aspect of the defendant — that is to press companies, as a shareholder, to reform their business,” he said.
The high court said there was reason to believe Murakami’s fund employed its own tactics in the purchase of the AM broadcaster’s stock and Livedoor’s information was not necessarily the only data that led to the purchase.
The high court also said Murakami did not initially consider the information from Livedoor as insider information as prohibited by law, believing it was not solid enough.
Judge Kadono said the case did not require a prison term or the highest fine against the fund.
In a two-hour reading of the sentence, Kadono said Murakami’s insider trading in NBS stock to gain a huge profit was an act of market manipulation — an unhealthy and unfair activity that must be frowned upon.
The court said that at the point in the dealings with Livedoor that Murakami became aware the Internet firm was starting to move toward acquiring a large amount of Nippon Broadcasting stock, he could have judged that buying the same stock would be considered by authorities as insider trading.
Murakami’s lawyers argued that when he and Livedoor officials met in November 2004, Livedoor did not have the funds to buy a large number of NBS shares.