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The Financial Times raised questions in its lead editorial Tuesday about whether financial authorities are being even-handed in their arrest of investment fund chief Yoshiaki Murakami for suspected insider trading.

“Obviously, that does not excuse wrongdoing. But where it has occurred, it should be pursued systematically, not selectively,” the London-based paper said in the editorial titled “Japan’s watchdogs bare their teeth.”

While praising the stepped-up crackdown on financial misdeeds, it said that if Japanese authorities are to establish a transparent rules-based system, they need to adhere to clear principles: “punishment must fit the crime” and “justice must be seen to be even-handed.”

The editorial also referred to the recent indictment of Takafumi Horie, former president of Livedoor Co., for breaches of securities laws.

“It is curious that authorities have concentrated their efforts so heavily on two figures whose flamboyantly swashbuckling methods have earned them national fame,” the editorial said. “The authorities may believe that choosing two such prominent targets will serve as a warning to others. But in the eyes of many members of Japan’s business establishment, the two men’s biggest crime is to have upset the traditional order by aggressively challenging incumbent managements.”

The two had performed a public service in a country “where companies’ performance has often been handicapped by supine boards, sleepy managers and stubborn disdain for shareholders’ rights,” it said.

“Companies that perform well and genuinely respond to the best interests of all shareholders have nothing to fear from the kind of investor activism employed by Mr. Murakami and Mr. Horie,” it concluded.

Murakami was arrested Monday on suspicion of insider trading in connection with purchases of Nippon Broadcasting System Inc. shares from November 2004 to January 2005.

Horie, another icon of Japan’s new economy, was arrested in January with other former Livedoor executives and has been indicted on accounting fraud charges.

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