Horiemon is the nickname of Takafumi Horie, president of a popular Japanese Internet portal site called livedoor (Tokyo Stock Exchange Mothers Index ticker: 4753). The media pays close to attention to his and his firm's activities often referring to him as the un-Japanese businessman because of his very casual attire and maverick leadership style. In an earlier post I likened his approach to business with Larry Ellison's, CEO of Oracle (ORCL).
Well, Horiemon and livedoor Co are back dominating news headlines again after allegations and a now underway investigation of involvement in a stock scheme became public yesterday. I was at Haneda Airport in Tokyo yesterday just about to catch a plane when a news flash breaking the news of the investigation streamed across the television. My first reaction was it must be a minor event or maybe even perhaps a mistake in which Horie and livedoor are innocent. Livedoor's shares were down only three yen at Monday's market close. However, the market's reaction Tuesday has been unmistakably negative and there is mounting doubt as to whether livedoor will be able to survive unscathed as a publicly traded company.
What the public and concerned investors know so far is that both livedoor's offices and company president Takafumi Horie's (aka Horiemon) home in Roppongi Hills (an upscale high-rise office and residential complex in Tokyo) were searched as part of an investigation by the Tokyo District Public Prosecutor's Office and members of the Securities and Exchange Trade Surveillance Committee. The main target of the investigation is livedoor Marketing, a subsidiary of livedoor. The allegations includes charges of fake and falsified public filing of corporate financial data that inflated figures leading to stock price increases of its shares and its parents' related to an October 2004 purchase of a publishing firm.
Livedoor's shares were down 100 yen to close at 596 yen, off more than 14% today (Tuesday). Volume was only 800,000 shares traded because trading was stopped after livedoor reached its single day loss limit. It's reported there's an additional 200-million-plus worth of shares with sell orders. Furthermore, the news of livedoor's investigation cast a dark cloud over Japanese stocks as sellers outnumbered buyers nearly 15:1 among shares traded on the 1st section of TOPIX. The Nikkei 225 tanked 462 yen losing 2.84% on the day. Trading of livedoor Marketing's (Tokyo Stock Exchange Mothers Index ticker: 4759) shares were also stopped leaving them down 1,000 yen at 5,150 yen losing over 16% on the day.
In a press conference early this morning Horie stated he is cooperating with authorities and will continue to do so throughout the investigation. He also apologized again to livedoor stakeholders for any concerns they may have. Horie said he plans to brief everyone once the situation is understood and will not consider resignation until that time.
At a press conference yesterday Horie stated he "will strive to expand the business as (he) did in the past," apologizing to livedoor investors for the concern they might have over the investigation and impact on the firm. He also rejected the idea that he step down as president calling any such suggestion "irresponsible" as everyone is still trying to understand the situation. This is the second time in a very short period that he has had to reject such an idea. At his firm's annual shareholding meeting he had to defend his business strategy and why the firm wouldn't be paying an annual dividend.
PM Koizumi commented publicly that he doesn't know what's going on with the livedoor investigation but will follow it closely. He acknowledges his support of Horiemon last September as he was campaigning for the privatization of Japan Post. However, he separated that event from the current investigation.
In news just coming out of Japan, it has been reported that Horie and two of his closest associates will attend a questioning session as suspects in violation of securities laws. The Tokyo District Public Prosecutors Office is expected to question the three on their knowledge of the alleged violations and will ask them to elaborate on their roles with livedoor.
Materials relied upon for this post include: Asahi Shimbun; Yahoo Japan Finance News; livedoor.com
See also: Fackler, Martin. "Prosecutors Raid Offices of Livedoor and Home of Its Founder." The New York Times online.
