Fund manager sentenced to 2 years in jail for insider trading

   The Tokyo District Court on July 19 sentenced fund manager Murakami Yoshiaki to two years in prison for insider trading in violation of the Securities and Exchange Law. A prison sentence given for insider trading is extraordinary.

   The court also imposed a fine of 300 million yen on Murakami’s investment advisory firm “MAC Asset Management,” the core of the “Murakami Fund.” Murakami was also levied an additional forfeiture of about 1.2 billion yen, a record high in similar cases.

   The defendant immediately filed an appeal to a higher court.

   On November 8, 2004, Murakami heard from then Livedoor President Horie Takafumi that Horie’s company was willing to buy up a large amount of shares of Nippon Broadcasting System (NBS). Murakami bought NBS shares before Horie announced the buyout and then sold them after their market price took a jump due to the buyout. With this trading scheme, Murakami made a profit of about 3 billion yen.

   Murakami’s case symbolizes the increase in money games that the government has promoted through financial deregulations.

   Orix Corporation Chairman Miyauchi Yoshihiko, who led the Government Council for Regulatory Reform, and Bank of Japan Governor Fukui Toshihiko invested in the Murakami Fund.

   Orix financed 45 percent of the capital of MAC Asset Management and assigned an Orix executive as an outside board member until just before Murakami was arrested.

   BOJ Governor Fukui contributed 10 million yen to the Murakami Fund when it was established. Fukui earned more than 14 million yen as of the end of 2005, while imposing a “zero-interest” policy on the public.

   Saitama University Professor Aizawa Koetsu said, “Murakami was a green mailer. He bought up shares of a company he targeted, made a takeover offer to the company, then sold the shares after driving up its price. He was just interested in making profits, not the management of the company. In the background of Murakami’s activities was the former Koizumi government’s financial deregulations following the U.S. lead, such as enabling mergers and acquisitions to be made easier through the exchange of shares.”

- Akahata, July 20, 2007