Japan Said to Probe Activist Murakami for Market Manipulation

Yoshiaki Murakami in 2006.

Photographer: Haruyoshi Yamaguchi/Bloomberg

Japan’s securities watchdog is investigating activist investor and convicted insider trader Yoshiaki Murakami for manipulating stock prices, according to an official.

The Securities and Exchange Surveillance Commission searched Murakami and his daughter Aya’s homes this morning seeking evidence that he tried to manipulate the market with tactics including selling large amounts of shares in multiple companies, NHK reported. The SESC official confirmed there is an investigation, while declining to be identified in line with the agency’s policy. This evening, men wearing suits carried boxes out of the central Tokyo building where the office of the Murakami family’s investment company is based. A woman who answered the phone at the office declined to give her name or comment.

Murakami is a former trade ministry bureaucrat who quit to start his own investment fund in 1999 and became an outspoken early champion of shareholder rights in Japan. In 2007, Murakami was convicted on charges that he bought shares in a broadcaster after learning that Internet entrepreneur Takafumi Horie’s Livedoor Co. planned to make a hostile bid for its control. Murakami was sentenced to two years in prison, which was suspended on appeal.

“He’s been off the radar," said Andrew Clarke, director of trading at Mirabaud Asia Ltd., a Hong Kong brokerage. “It’s unusual in Japan to go after the same person twice. Unbelievable.”

In August, Murakami failed to win approval from Kuroda Electric Co. stock owners for his proposal to appoint four outside directors, including himself, to the company’s board. The proxy fight represented a return to shareholder activism in Japan after years of silence.

Kuroda Electric, and other companies in which Murakami has recently disclosed he owns stakes, plunged in afternoon trading. The electronics trader erased a 0.5 percent gain to slump 7.4 percent. Sanshin Electronics Co. tumbled 7.1 percent and Excel Co. lost 5.3 percent, while Accordia Golf Co. fell 1.4 percent.

“Investors watch his moves for stock trade ideas," Mirabaud’s Clarke said. “He is quite a big swinger in Japan."

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