Japanese prosecutors have raided one of the country's most high-profile Internet companies, prompting the main stock index to suffer its biggest one-day point drop in 20 months. The legal investigation has political overtones.
The benchmark Nikkei index of the Tokyo Stock Exchange plummeted 462 points on Tuesday, a drop of more than 2.75 percent. Internet-related issues drove the selling, and particularly hard hit were businesses having a relationship with the Internet company Livedoor.
Livedoor's stock, one of the few in Japan that is extremely popular with individual investors, fell 14.5 percent amid a glut of sell orders.
It was not only the company's stock that suffered, however. Livedoor's headquarters and the homes of its founder were the target of an all-night raid Monday, which prosecutors said stemmed from allegations of securities law violations, including spreading rumors to manipulate stock prices.
The company's founder and chairman, Takafumi Horie, 33, called a 7 a.m. news conference Tuesday, telling a national audience that the company would conduct its own investigation into the allegations raised by prosecutors.
While denying that he or the company has done anything wrong, Horie says Livedoor will look into the charges internally and quickly report its findings to the public.
The incident is being seen as more than a simple criminal matter.
Horie, a brash entrepreneur who likes to break the rules, ran for parliament last year at the urging of Prime Minister Junichiro Koizumi. His opponent was a Koizumi rival and defector from the governing Liberal Democratic Party, former Construction Minister Shizuka Kamei.
Horie lost to Kamei, a member of Japan's political establishment, and talk on the streets of Tokyo Tuesday was that the raids were a message from the country's old guard: don't challenge the establishment, or the way it does business.
Horie usually appears at meetings and news conferences dressed in jeans and a T-shirt. A drop-out of Japan's most elite university, his motto is "earning money is everything."
In recent years, he and other mavericks have turned their backs on the traditional Japanese business etiquette of consensus and modesty. Instead, they have emulated aggressive Western entrepreneurs, engaging in mergers and acquisitions to make money quickly, and then flaunting it by purchasing jets and exotic cars.
Horie, in particular, became a wildly admired celebrity, especially among young people, for his ultimately unsuccessful effort to buy a professional baseball franchise and the failed hostile takeover of a television network.
Kamei said Tuesday that if Horie is found to have broken the law, Mr. Koizumi would have to take the blame for getting the Internet entrepreneur involved in politics.
Mr. Koizumi rebuffed that suggestion, saying the criminal investigation has nothing to do with last year's election.