Bogus share swap allegedly concocted to pad group's financial statements

Livedoor Co. gained 5.6 billion yen from the sale of new shares it issued in March 2004 under the pretext of swapping them for shares in two firms it was targeting for takeover, prosecution sources investigating alleged securities law violations at the Internet services firm said Thursday.

Of the proceeds, Livedoor used 3.7 billion yen to pad its group financial statements for the business year to Sept. 30, 2004, according to the sources close to a special investigative squad of the Tokyo District Public Prosecutor's Office.