JAPAN: Murakami may be facing fine of 13 billion yen

Potential fine might include both combined amount of purchases and sale proceeds of Nippoin Broadcasting System shares

Japan Times
Tuesday, June 13, 2006

Maverick investor Yoshiaki Murakami may be forced to pay up to 13 billion yen if found guilty of illegal trading in Nippon Broadcasting System Inc. shares, sources familiar with court precedents said Monday.

Murakami, who was arrested last week, is thought to have pocketed a profit of more than 3 billion yen by selling a large block of NBS shares he had purchased for 9.95 billion yen based on alleged insider information.

While the Securities and Exchange Law stipulates that profits earned through business practices in violation of the law should be seized, the combined amount of purchases and proceeds in the Murakami case may be regarded as undue profit in view of many court precedents, the sources said.

One such case involved trading in shares in an e-mail service provider conducted by a former employee of Hikari Tsushin Inc. in 2001 following the mobile phone subscription agency's decision to launch a public tender offer for the firm.

But as almost all past cases involved funds owned by those who engaged in insider trading, the Murakami case may be treated differently because the alleged insider trading took place in the process of managing funds collected from investors.

Some observers point out that it will be difficult to collect a fine from Murakami if he merely managed investor funds. In addition, returns earned by investors unaware of the insider trading are unlikely to be subject to the penalty, they say.

Under the circumstances, there is a possibility only the Murakami fund's proceeds will be seized.

Date Posted: 6/13/2006