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Late last October, while everyone was watching Rakuten Inc. make a surprise bid to integrate with Tokyo Broadcasting System Inc., Yoshiaki Murakami launched a new investment plan.

His target was Dream Technologies Corp., a picture software development company in a capital tieup with Heisei Denden Co., a telecommunications venture that had applied for court protection under the Civil Rehabilitation Law earlier in the month.

Due to its credit insecurity from its Heisei connection, Dream’s stock price had gone limit-down for more than 10 days at the end of October, bottoming out at 11,200 yen.

When the price recovered to 20,000 yen on Oct. 31, Dream announced a capital increase of 5 billion yen by allocating new shares to the Murakami fund at a price of slightly less than 16,000 yen per share.

Soon afterward, individual investors rushed to buy Dream’s stocks, hoping to benefit from the fund’s acquisition.

“It was an unusual rise,” said an official at one Internet securities company.

Immediately before Nov. 18, when payment of the capital increase was completed, the share price topped 40,000 yen.

The fund, which acquired about 310,000 Dream shares, began to sell them intermittently beginning Nov. 21, the next business day after the purchase.

Up to the first 10 days of December, prices of Dream’s shares hovered at the 30,000 yen level. At that price, the fund was making a profit of about 20,000 yen per share.

“By luring individuals and funds into buying the stock, the (Murakami) fund sells their shares before the price falls. It is the model of Murakami alchemy,” of turning something average into gold, the official said, referring to the fund’s speculative methods of driving up a stock price.

By the end of 2005, the Murakami fund had sold more than 60 percent of the shares, and almost all of them by early April, making a huge profit.

Dream’s individual shareholders numbered about 35,000 at the end of 2005, up by more than 16,000 the prior year.

Since the last 10 days of May, however, the price has been hovering below 10,000 yen.

“Many individual investors, unable to endure the gradual drops in stock prices, are making bargain sales,” said an executive at another Internet securities company.

“Former representative Murakami has tarnished the social infrastructure of the stock market,” said Hideaki Kubori, a lawyer with experience in mergers and acquisitions. “The largest victims are those who took part in the market, believing (the players) were honest and sincere.”

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