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Livedoor's illegal moneymaking needs probe
Akahata editorial (excerpts)

The Tokyo District Public Prosecutor's Office Special Investigation Division on January 17 searched the office of Internet services company Livedoor Co. and the home of its president Horie Takafumi.

The search was made on suspicion that a Livedoor-related company provided false information concerning its takeover of a publishing company for the purpose of boosting its share price and that it violated the Securities and Exchange Law when it padded data on sales and profits in its financial statement.

The series of deregulations on the stock market since the late 1990s has allowed a laissez-faire style to prevail.. The market is controlled by the trend that an increase in profits is all that matters even if in violation of the law.

Livedoor, a one-time favorite of the market, has now come under criminal investigation for its illegal securities trading.

Livedoor Marketing, a Livedoor group firm, in 2004 announced that it would take over a publishing company by converting its newly issued shares to its partner investment firm shares. However, the fact was that an investment fund affiliated with the Livedoor group had already bought a 100 percent stake in the publishing firm.

The Livedoor Marketing stock rose several ten times following the announcement of stock splitting (or increasing the number of shares by dividing each share), reportedly resulting in over 4 billion yen in profit for the investment fund.

Livedoor Marketing is also suspected of window-dressing in its earnings report for the third quarter of 2004.

Livedoor and its affiliates were apparently seeking to spread rumors about their risky stock splitting with the aim of boosting the share price and about Livedoor's takeover plans. Most of the earnings of these companies are made in the money market.

Such a way of making profits cannot continue forever.

In order to introduce funds into the stock market and maximize investment profit, financial circles and the U.S. government are demanding that the securities market be liberalized. The Liberal Democratic Party government has met their requests by carrying out structural reforms in financing and securities and planning further lifting of regulations. Without introducing U.S. style supervision and discipline, laws regulating the market have been made toothless in the last several years.

Calling on the public to invest money instead of saving it, the Koizumi Cabinet under its easy money policy channeled funds into the stock market and boosted stock investment. The society that the Koizumi "structural reform" seeks is one in which the wealth of the rich further increases, while the income of the poorer is tapering off.

"You're a winner if you make money" is Horie's motto, but such a society has no room for human dignity. His illegal way of money making to the degree of devastating the market and the society requires a thorough probe.
- Akahata, January 18, 2006