Yoshiaki Murakami, founder of Japan’s best-known investment fund, pleaded not guilty Thursday to charges of insider trading involving shares of Nippon Broadcasting System Inc.
“I am convinced I am not guilty,” said Murakami, 47, at the start of his Tokyo District Court trial. “I have dignity and pride that I am a law-abiding person, and for that reason, I will reveal the truth and wait for the court to apply a righteous judgment in terms of the accuracy of its interpretation and application of the law.”
The bureaucrat-turned-financier was arrested and charged in June for insider trading linked to his fund’s purchase of the radio broadcaster’s shares.
The fund’s core investment advisory firm, MAC Asset Management Inc. (now MAC Asset Management Pte. Ltd.), allegedly paid 9.95 billion yen to acquire about 1.93 million shares of NBS from Nov. 9, 2004, through Jan. 26, 2005.
The financier eventually sold 5 million shares of NBS after Livedoor Co. announced Feb. 8 that it had obtained a 35 percent stake in the broadcaster. MAC Asset reportedly made 3 billion yen on the deals.
In their opening statement Thursday, prosecutors contended the transactions resulted from “illegally obtaining undisclosed information to make profit,” because Livedoor founder and then President Takafumi Horie and then Chief Financial Officer Ryoji Miyauchi had conveyed the buyout decision to Murakami by Nov. 8, 2004, at the latest.
Shortly before his arrest, Murakami acknowledged in a news conference that he knew about Livedoor’s intention to raid NBS before it was announced and that it was possible his actions could be construed as insider trading.
But he stopped hedging in his opening statement.
“I did hear from Mr. Horie that he wanted to take over NBS, but I never thought he was serious,” the financier told the judges. “I thought it was typical bragging by Livedoor.”
Murakami also said his former fund had been buying NBS shares since 2001, distancing the purchases in question from his advance knowledge of Livedoor’s NBS takeover plan.
He also said his apparent acknowledgment of the insider trading charge was merely an attempt to save other executives of the fund from being prosecuted in the same manner as in the Livedoor case. Earlier this year, prosecutors used Horie’s denial of knowledge about window-dressing violations at Livedoor to arrest its top managers.
At the trial, Tsuyoshi Maruki, a representative of MAC Asset Management, which was also charged in connection with the case, backed up his former boss.
“Murakami decided to own up to the charges in order to save the fund’s investors,” he said, explaining that many executives, including Murakami himself, were crying when he made the decision.
Murakami’s trial will focus on how much knowledge the outspoken financier had before the NBS share purchases in late 2004, and how serious Livedoor was about taking over the small AM radio broadcaster, which held the largest stake in Fuji Television Network Inc., the flagship of the Fuji Sankei group, the nation’s largest communications conglomerate.
After the opening statement, ex-Livedoor CFO Ryoji Miyauchi, currently on trial for accounting fraud, testified as the first witness.
Although his testimony didn’t touch on the question of whether Livedoor told Murakami about the buyout plan, it provided details on how Murakami was working on the deal before November.
Miyauchi told the court that Murakami knew Livedoor was interested in obtaining media properties as part of its business.
On Sept. 15, 2004, Murakami visited Horie and Miyauchi at Livedoor headquarters in Roppongi Hills and suggested Livedoor acquire one-third of the outstanding NBS shares. Murakami already had an 18 percent share in NBS and had made vociferous attempts to change its convoluted capital structure, which effectively made NBS the TV station’s parent company.
He reportedly told Livedoor executives he would cooperate with the Internet firm to acquire more NBS stock and management rights in the broadcaster, Miyauchi said, adding that Murakami explained that the scheme was feasible because the stock owned by their firms would make them the top NBS shareholders.
The defense team intends to call Horie to the stand because the Internet mogul has denied that his NBS dealings with Murakami were illegal.
Horie is on trial for falsifying Livedoor’s earnings. Murakami’s fund was established in 1999 and grew rapidly by taking over companies with undervalued stock prices.
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