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Old 01-18-2006, 01:53 AM
Louis Cypher Louis Cypher is offline
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Default Japan Internet maverick hit by fraud claims

January 17, 2006


New allegations emerged on Wednesday that Livedoor Co. tampered with its earnings statements, prompting a suspension of the Japanese Internet portal's shares and driving down the stock market for a second day.

The Mainichi newspaper reported that Livedoor had changed details in its report for the year ended September 2005 while the Yomiuri newspaper said the company had falsified part of its report for the previous year.

Livedoor said in a statement that it would comment after conducting its own investigation. The Tokyo bourse said it would resume trading of the company's shares at the start of afternoon trade at 12:30 p.m. (0330 GMT).

The Tokyo District Prosecutors office said on Monday that it and the Securities and Exchange Surveillance Commission were investigating Livedoor for spreading false information related to shares in a subsidiary.

That triggered a 2.84 percent drop in the Nikkei share average on Tuesday, its biggest percentage loss in nine months. The Nikkei was down 2.6 percent on Wednesday morning.

Livedoor shares failed to trade on Tuesday due to a huge glut of sell orders but were quoted down 14.4 percent, the daily limit.

Before the suspension on Wednesday, the stock was quoted down 17 percent in the pre-market.

"We need more clarification on what offenses if at all have been committed," said Hiroshi Kamide, an analyst with KBC Securities.

UBS Warburg analyst Atsushi Shinoda also said in a research note on Tuesday that it had put its "buy" rating on Livedoor under review until the facts become clearer.

Authorities have not provided further details about their investigation since the initial statement, even as local media have reported on possible window-dressing of the company's earnings.

Reuters sources familiar with the matter said on Monday the investigation by prosecutors and securities regulators was centered on the acquisition in 2004 of a publishing firm, Money Life, by a predecessor of Livedoor Marketing, a separately listed subsidiary.

According to local media reports, Livedoor and Livedoor Marketing are suspected of illegally profiting from a deal that had been announced as an external acquisition but which in fact was an internal transfer of shares.

The company so far has declined to comment on specific allegations but has said it was conducting its own investigation and was cooperating with authorities.

Livedoor, known for its aggressive acquisition strategy, has grown rapidly to amass a broad portfolio of Internet-related businesses from software to online financial services.

The company's maverick chief executive, Takafumi Horie, has made many enemies in Japan's staid corporate and media world with his "bare-knuckled" business practices and brash personality.

The 33-year-old college dropout emerged as a media fixture in 2004 when he launched a bid to buy a professional baseball team.

He then shook Japan's conservative broadcast industry last year when he took advantage of a structural loophole to try and take control of the sprawling Fuji Sankei media empire. Both attempts failed.

He also ran for parliament in a general election last September but lost to an old-guard incumbent.
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Old 01-18-2006, 04:00 AM
Louis Cypher Louis Cypher is offline
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Default RE:Japan Internet maverick hit by fraud claims
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Old 01-19-2006, 03:31 AM
Louis Cypher Louis Cypher is offline
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Default RE:Japan Internet maverick hit by fraud claims

Jan 18, 11:38 PM EST

Brokerage Exec. Dead in Apparent Suicide

Associated Press Writer

TOKYO (AP) -- An executive of a securities firm allegedly involved in corporate takeover deals by Internet startup Livedoor Co. was found dead in an apparent suicide, police said Thursday. Livedoor again denied any financial misdeeds.

A body believed to be Hideaki Noguchi, vice president of H.S. Securities Co., was found in a hotel in the southern state of Okinawa Wednesday evening, according to local police spokesman Tatsuki Yara.

Police suspect that Noguchi, 38, committed suicide, Yara said.

Noguchi is a former employee of On the Edge, the predecessor of Livedoor, which is at the center of a widening investigation that triggered massive selloffs on the Tokyo Stock Exchange on Tuesday and Wednesday. The market recovered some Thursday.

H.S. Securities is among the companies raided this week by prosecutors in connection with fraudulent practices by Livedoor. The company confirmed in a statement Thursday that it is under investigation by prosecutors and securities watchdog officials.

Livedoor is facing a widening criminal investigation that sparked a massive sell-off in Japan's stocks market Tuesday and Wednesday. Stocks recovered some ground in Thursday's morning session.

The scandal started Monday evening when Tokyo prosecutors raided the company's offices to investigate allegations the company had violated securities laws - spooking investors and sending shares plunging.

Livedoor has repeatedly denied any wrongdoing. On Thursday it submitted a statement to the Tokyo Stock Exchange saying it did not break securities laws during a 2004 corporate takeover, as alleged in media reports.

Reports have claimed that Value Click Japan Inc., the predecessor of a Livedoor subsidiary, provided false information during its takeover of Japanese publisher Money Life in 2004.

Livedoor allegedly concealed the fact that it already owned Money Life through an investment fund subsidiary of the Livedoor group, according to the reports.

But Livedoor denied those claims Thursday, saying the investment fund was not part of Livedoor. The company currently has 44 subsidiaries, many of which it took over, Livedoor spokesman Kazuyoshi Omura said.

"(Livedoor and the fund) have different operating officers. So we deemed it inappropriate to include the fund in our consolidated earnings report," Livedoor said in a statement Thursday to the Tokyo Stock Exchange.

Still, the Internet company may be delisted from the bourse if it is found to be in violation of securities laws, bourse official Mitsuo Miwa said. The exchange has asked Livedoor for more information, and a formal decision will come later, Miwa said.

The investigation has garnered intense media attention partly because of the fame of Livedoor CEO Takafumi Horie, 33, an entrepreneur who has made unsuccessful attempts to buy media conglomerate Fuji Television Network Inc. and a professional baseball team. He founded Livedoor in 1997.

Media reports have also said Livedoor is suspected of concealing a 1 billion yen ($8.7 million) loss for full-year results ending September 2004, among other allegations.

Livedoor offers a wide range of Internet-related services, including consulting, telecommunications, mobile sites and software development.

It also has bought chunks of other companies and raised capital by offering more of its own stock - an area that has drawn particular scrutiny from investigators.
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