livedoor Co.,Ltd. (株式会社ライブドア Kabushiki-gaisha raibudoa) is an Internet service provider that runs a web portal and numerous other businesses. Its headquarters is in the Sumitomo Fudosan Nishishinjuku Building (住友不動産西新宿ビル Sumitomo Fudōsan Nishi-Shinjuku Biru) in Nishi-Shinjuku, Shinjuku, Tokyo.[1]
The company was founded and led in its first 10 years by Takafumi Horie, known as "Horiemon" in Japan. Employing over 1,000 people, it had grown into one of Japan's premier Internet businesses as well as one of the country's most controversial enterprises because of its frequent use of acquisitions and stock swap mergers to achieve growth, before being brought down by fraud scandals and bought by Korean web portal NHN.
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Livedoor started in 1995 as Livin' on the Edge, a web consultancy run by Horie and a group of student friends[2] and was officially founded as Livin' On the EDGE Inc. in April 1996, in Minato, Tokyo.[3] In 1997, it was renamed Livin' On the EDGE Co., Ltd. Though initially a limited company (yugen kaisha), Livin' On the Edge was reorganized into a joint-stock company (kabushiki kaisha) in July 1997 and went public on the Tokyo Stock Exchange's Mothers market in April 2000. In November 2002, Livin' on the Edge acquired the free Internet services business of Livedoor Corp., which had gone bankrupt. On the Edge changed its name to Edge Co., Ltd. in April 2003,[4] then adopted the name of the ISP business it had acquired from Livedoor Corp., by renaming itself livedoor Co. Ltd. (Livedoor), in February 2004.[5] This was followed by a 1:100 stock split.
In March 2004, livedoor moved to acquire the Kintetsu Buffaloes, a Japanese baseball team, but later withdrew its offer and, in September 2004, founded its own team (named livedoor baseball) and applied for admittance to Japan's professional baseball organization. The team's home ground was to be in Sendai, Miyagi Prefecture, but livedoor lost the competition to be the city's home team to Rakuten, a Japanese e-commerce company.
Livedoor has made a series of acquisitions in the U.S. including MailCreations in Miami, Florida, in June 2004, which functions as the company's U.S. headquarters. Livedoor also entered the search and contextual advertising space in America in November 2005.
The TSE delisted livedoor as of April 14, 2006, in the wake of a scandal involving securities-law violations.[6][7]
The media reported allegations of securities fraud (including window dressing and share-price manipulation) on January 17, 2006, prompting panic selling on the Tokyo Stock Exchange as investors tried to unload Livedoor shares when some brokers announced they would no longer allow use of the issue for margin trading. Volume was so heavy that it threatened to overload the TSE's computer system, prompting a halt in trading for the entire market—the first time this has ever occurred.
The scandal broke on January 16, 2006, when Tokyo prosecutors raided several Livedoor locations, Horie's home, and the homes of other Livedoor and subsidiary executives on suspicions of securities law violations. The raids spooked investors and sent shares plunging on January 17 and 18 as a widening criminal investigation sparked big tech-stock selloffs. The TSE ordered Livedoor to provide an answer to the allegations but was unsatisfied with the company's initial report after a hasty internal investigation. It told the company to come up with a more detailed report and threatened to delist Livedoor if illegalities were proven.
On January 18, 2006, Hideaki Noguchi, an executive of H.S. Securities, a firm raided by prosecutors earlier in the week in connection with Livedoor, was found dead in an Okinawa hotel room after what the authorities are labeling a suicide. [1]
The authorities called in several Livedoor and subsidiary executives for questioning over several days, and Horie himself on January 23. After several hours of questioning Horie, investigators felt they had learned enough to press charges and petitioned for four arrest warrants, which were granted. Horie, Livedoor's chief financial officer, and the presidents of two subsidiaries were arrested mid-evening for securities and accounting fraud.[8] They were held for two months without bail, and during this time, Livedoor's temporary Representative Director Fumito Kumagai was also arrested.[9]
Japan's Securities Commission filed a criminal complaint against the five arrested ex-executives of the company on March 13, 2006. Founder Horie was sentenced to 2.5 years in jail on March 16, 2007, but is still out while appealing his conviction (as of Sept 29, 2010), and the others were given various jail sentences four days later, but also appealed.[10]
After losing 90% of its stock price in four months and strong evidence of securities fraud, Livedoor was delisted from the Tokyo Stock Exchange on April 14, 2006.[11]
Fuji Television sued the company for ¥35 billion in damages in March 2007;[12] 1,000 individual investors filed a class-action suit in May 2006, eventually rising to 3,340 asking for ¥23 billion, which resulted in a final ruling of ¥7.6 billion against Livedoor,[13] and other similar suits resulted at least one judgment of ¥4.9 billion.[14] Livedoor in turn sued its own executives, with founder Horie settling for ¥21 billion and six others settling for a total of ¥760 million.[15]
There were rumors that LiveDoor was speaking with several investment bankers about an $2 billion initial public offering in 2008, and several internet portals expressed interest in participating, but no IPO ever materialized. Instead, Livedoor put itself up for sale in early 2010 and was purchased by Korean web portal NHN for a reported ¥6.3 billion.[16]
Information obtained during the investigation also led to the arrest and conviction of fund manager Yoshiaki Murakami for using inside information to profit off of a stake Livedoor purchased in Nippon Broadcasting System in 2005.[17]
Horie published an autobiography during his appeals, Complete Resistance, in which he proclaims his innocence and states that he was targeted by the government only due to his infamy, not the actual nature or severity of any crimes.[18]
In order to prevent a recurrence of the scandal, Japan passed a law similar to Sarbanes–Oxley, nicknamed J-SOX, on June 14, 2006.
Livedoor's registered headquarters is located at 16-9, Kabukicho, Shinjuku, Tokyo, 160-0021, Japan, but its principal corporate offices are on the 38th floor of the prestigious Roppongi Hills Mori Tower at 10-1, Roppongi 6-chome, Minato, Tokyo, 106-6138, Japan.