Jan. 24 (Bloomberg) -- Livedoor Co. said it will oust founder Takafumi Horie as president after the 33-year-old Internet millionaire was arrested on fraud charges.

Horie will be replaced by Kozo Hiramatsu, 60, a vice president who heads Yayoi Co., an accounting unit, Livedoor said in a statement to the Tokyo Stock Exchange today. Horie hasn't submitted his resignation, the statement said.

Shares of Livedoor affiliates rose today for the first time since prosecutors raided the company's Tokyo headquarters on Jan. 16. The raid triggered a plunge in Japanese stocks that led the exchange to halt trading for the second time in its history.

Three other Livedoor executives, including finance head Ryoji Miyauchi, were also arrested yesterday to face charges they provided false information about an acquisition and overstated earnings. Miyauchi resigned from the board, the statement said.

Horie drew national attention last February when he tried to take over Fuji Television Network Inc.'s radio affiliate before settling on an alliance.

Livedoor shares tumbled 31 percent to 176 yen, the maximum decline permitted under stock exchange rules. The shares plunged 75 percent since the raid, erasing $4.8 billion of market value.

Shares of Livedoor Auto Co., a car dealer controlled by Livedoor, jumped 47 percent to 157 yen. The stock traded at 373 yen before last week's raid. Turbolinux Inc., an affiliate that sells Linux-based operating systems, and Dynacity Corp., a property developer within the group, also gained today.

Agreement Void?

Separately Fuji Television Network Inc. said restrictions on selling its stake in Livedoor are no longer valid.

Fuji Television bought 133.74 million shares in Livedoor for 44 billion yen in May as part of an agreement to form a business alliance and settle a hostile takeover battle initiated by the Internet firm. Fuji agreed not to sell Livedoor shares before the end of September 2007.

Prosecutors said in a statement yesterday that the executives they misled shareholders with false information and inflated earnings to manipulate stock prices and complete securities deals.

The company's Livedoor Marketing Co. unit in October 2004 announced it would acquire publisher Money Life with stock, when the acquisition had already been made with cash through an investment fund. The affiliate also inflated its earnings and used its higher stock price to its advantage during the stock swap, the prosecutors said.

Born in 1972 in Fukuoka on southern Japan's Kyushu Island, Horie attended Kurume University Fusetsu High School, as did Masayoshi Son, the founder of Softbank Corp., Japan's second- largest provider of high-speed Internet access.

Horie went on to study literature at Tokyo University, dropping out after setting up a Web site consulting firm called Livin' On The EDGE Ltd. in 1996 in a 12-square-meter apartment.

To contact the reporter on this story: Aiko Wakao in Tokyo at awakao@bloomberg.net

Last Updated: January 24, 2006 03:55 EST