was a Japanese company that functioned as an
Internet service provider
An Internet service provider (ISP) is an organization that provides services for accessing, using, or participating in the Internet. ISPs can be organized in various forms, such as commercial, community-owned, non-profit, or otherwise private ...
and operator of a
web portal
A web portal is a specially designed website that brings information from diverse sources, like emails, online forums and search engines, together in a uniform way. Usually, each information source gets its dedicated area on the page for displayin ...
and
blog
A blog (a truncation of "weblog") is a discussion or informational website published on the World Wide Web consisting of discrete, often informal diary-style text entries (posts). Posts are typically displayed in reverse chronological order ...
platform before being brought down by a scandal in 2006. The company was founded and led in its first 10 years by
Takafumi Horie
is a Japanese entrepreneur who founded Livedoor, a website design operation that grew into a popular internet portal. After being arrested and charged with securities fraud in 2006, he severed all connections with the company. His trial began o ...
, known as "Horiemon" in Japan. Livedoor grew into one of Japan's premier Internet businesses, putting over 1,000 employees on its payroll at its peak. Its reliance on
acquisitions
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
and
stock swap mergers to achieve growth also made it one of the country's most controversial enterprises. Its growth came to a resounding halt when scandal erupted in early 2006. An investigation of securities law violations led to a nosedive in the company's stock price. The Tokyo Stock Exchange delisted Livedoor on April 14, 2006. The floundering company's properties were purchased by
South Korea
South Korea, officially the Republic of Korea (ROK), is a country in East Asia, constituting the southern part of the Korea, Korean Peninsula and sharing a Korean Demilitarized Zone, land border with North Korea. Its western border is formed ...
-based
NHN Corp in 2010.
Today the
ISP
An Internet service provider (ISP) is an organization that provides services for accessing, using, or participating in the Internet. ISPs can be organized in various forms, such as commercial, community-owned, non-profit, or otherwise private ...
and
blog
A blog (a truncation of "weblog") is a discussion or informational website published on the World Wide Web consisting of discrete, often informal diary-style text entries (posts). Posts are typically displayed in reverse chronological order ...
services that bear the Livedoor name are operated by Line Corporation, developers of
Line messaging services and the
Naver Japan search portal. Line Corporation, based in Japan, was spun off from NHN Japan, an arm of its Korean parent, in February 2013.
History
Origins and growth
Livedoor began in 1995 as Livin' on the Edge, a
startup company run by Horie and a group of college friends and was officially founded as Livin' On the EDGE Inc. in April 1996, in
Minato, Tokyo
is a special ward in Tokyo, Japan. It is also called Minato City in English.
It was formed in 1947 as a merger of Akasaka, Azabu and Shiba wards following Tokyo City's transformation into Tokyo Metropolis. The modern Minato ward exhibits th ...
. In 1997, it was renamed Livin' On the EDGE Co., Ltd. Though initially a limited company (
yugen kaisha
Japanese aesthetics comprise a set of ancient ideals that include '' wabi'' (transient and stark beauty), '' sabi'' (the beauty of natural patina and aging), and '' yūgen'' (profound grace and subtlety). These ideals, and others, underpin much o ...
), Livin' On the Edge was reorganized into a
joint-stock company
A joint-stock company is a business entity in which shares of the company's capital stock, stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their share (finance), shares (certificates ...
(''
kabushiki kaisha
A or ''kabushiki kaisha'', commonly abbreviated K.K. or KK, is a type of defined under the Companies Act of Japan. The term is often translated as "stock company", "joint-stock company" or "stock corporation". The term ''kabushiki gaisha'' in ...
'') in July 1997 and within only 3 years, went public on the
Tokyo Stock Exchange
The , abbreviated as Tosho () or TSE/TYO, is a stock exchange located in Tokyo, Japan. It is the third largest stock exchange in the world by aggregate market capitalization of its listed companies, and the largest in Asia. It had 2,292 listed co ...
'
Mothersmarket in April 2000. In November 2002, Livin' on the Edge acquired the free Internet services business of Livedoor Corp., which had gone bankrupt. Livin' On the Edge changed its name to Edge Co., Ltd. in April 2003, then adopted the name of the ISP business it had acquired from Livedoor Corp., by renaming itself livedoor Co. Ltd. (Livedoor), in February 2004. This was followed by a 1:100 stock split.
In March 2004, during the
2004 Nippon Professional Baseball realignment, Livedoor moved to acquire the
Kintetsu Buffaloes
The were a Nippon Professional Baseball (NPB) team based in Osaka, Japan, which was in the Pacific League. In 2005 the team was merged with the Orix BlueWave to become the team now known as the Orix Buffaloes. The team played in Fujiidera Stad ...
, a Japanese
baseball
Baseball is a bat-and-ball sport played between two teams of nine players each, taking turns batting and fielding. The game occurs over the course of several plays, with each play generally beginning when a player on the fielding tea ...
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
In sports, home is the place and venue identified with a team sport. Most professional teams are named for, and marketed to, particular metropolitan areas; amateur teams may be drawn from a particular region, or from institutions such as sch ...
was to be in
Sendai, Miyagi
is the capital city of Miyagi Prefecture, the largest city in the Tōhoku region. , the city had a population of 1,091,407 in 525,828 households, and is one of Japan's 20 designated cities. The city was founded in 1600 by the ''daimyō'' Date ...
Prefecture, but livedoor lost the competition to be the city's home team to
Rakuten
() is a Japanese technology conglomerate based in Tokyo, founded by Hiroshi Mikitani in 1997. Centered around Rakuten Ichiba, its businesses include financial services utilizing financial technology, as well as digital content and communicati ...
, a Japanese
e-commerce
E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain manageme ...
company; the team became the
Tohoku Rakuten Golden Eagles
The , often shortened as the , are a baseball team based in Sendai, Miyagi Prefecture, Japan. It has played in Nippon Professional Baseball's Pacific League since the team's formation in November 2004. The team is owned by the Internet shopping ...
and began play in
2005
File:2005 Events Collage V2.png, From top left, clockwise: Hurricane Katrina in the Gulf of Mexico; the Funeral of Pope John Paul II is held in Vatican City; "Me at the zoo", the first video ever to be uploaded to YouTube; Eris was discovered in ...
.
Livedoor acquisitions in the U.S. include
MailCreations in Miami, Florida, in June 2004 which functioned as the company's U.S. headquarters. Livedoor entered search and contextual advertising spaces in America in November 2005.
A scandal involving securities law violations led the Tokyo Stock Exchange to delist Livedoor on April 14, 2006.
Allegations
The case broke on January 16, 2006, when Tokyo
prosecutor
A prosecutor is a legal representative of the prosecution in states with either the common law adversarial system or the Civil law (legal system), civil law inquisitorial system. The prosecution is the legal party responsible for presenting the ...
s raided several Livedoor locations, Horie's home, and the homes of other Livedoor and subsidiary executives on suspicions of
securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in los ...
. The raids spooked investors and sent shares plunging on January 17 and 18 as a widening criminal investigation sparked
panic selling
Panic selling is a large-scale selling of an investment that causes a sharp decline in prices. Specifically, an investor wants to sell an investment with little regard to the price obtained. The sale is problematic because the investor is reacting ...
on the
Tokyo Stock Exchange
The , abbreviated as Tosho () or TSE/TYO, is a stock exchange located in Tokyo, Japan. It is the third largest stock exchange in the world by aggregate market capitalization of its listed companies, and the largest in Asia. It had 2,292 listed co ...
. Some brokers announced they would no longer allow use of the issue for
margin
Margin may refer to:
Physical or graphical edges
*Margin (typography), the white space that surrounds the content of a page
*Continental margin, the zone of the ocean floor that separates the thin oceanic crust from thick continental crust
*Leaf ...
trading. Volume was so heavy that it threatened to overload the TSE's computer system, prompting a halt in trading for the entire market—a breaking record and the first time this has ever occurred. The TSE ordered Livedoor to provide a formal response to the allegations. When the company filed a hasty report after a quick internal investigation, the TSE told executives to provide a more detailed report and threatened to
delist Livedoor if allegations of improper activities proved valid.
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
is a prefecture of Japan. Okinawa Prefecture is the southernmost and westernmost prefecture of Japan, has a population of 1,457,162 (as of 2 February 2020) and a geographic area of 2,281 km2 (880 sq mi).
Naha is the capital and largest city ...
hotel room in what the authorities labeled a
suicide
Suicide is the act of intentionally causing one's own death. Mental disorders (including depression, bipolar disorder, schizophrenia, personality disorders, anxiety disorders), physical disorders (such as chronic fatigue syndrome), and s ...
.
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 warrant
An arrest warrant is a warrant issued by a judge or magistrate on behalf of the state, which authorizes the arrest and detention of an individual, or the search and seizure of an individual's property.
Canada
Arrest warrants are issued by a j ...
s, which were granted. Horie, Livedoor's chief financial officer, and the presidents of two subsidiaries were arrested mid-evening for securities and accounting fraud. They were held for two months without bail, and during this time, Livedoor's temporary Representative Director Fumito Kumagai was also arrested.
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. Others were given various jail sentences four days later but appealed.
Aftermath
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.
Fuji Television sued the company for ¥35 billion in damages in March 2007; 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, and other similar suits resulted at least one judgment of ¥4.9 billion. Livedoor in turn sued its own executives, with founder Horie settling for ¥21 billion and six others settling for a total of ¥760 million.
Information obtained during the investigation 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
, or JOLF, is a Japanese radio station in Yurakucho, Chiyoda ward, Tokyo, next to the Tokyo Imperial Palace. Founded in 1954, it is together with Nippon Cultural Broadcasting, the flagship station of the National Radio Network. Nippon Bro ...
in 2005.
Horie published an autobiography during his appeals, ''Complete Resistance'', in which he proclaims his innocence and states that he was being targeted only due to his infamy, not the actual nature or severity of any crimes.
The veracity of the suspicions aside, many smelled conspiracy given the timing of the action. It was seen as a political move by defenders of the status quo to punish Horie for daring to challenge them, and to discredit him and the business practices he had come to represent, which Horie's opponents considered distasteful and "un-Japanese."
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 Holdings
In 2007, the company spun off to create a new subsidiary that retained the name of "Livedoor" and most of its portal-related businesses and itself became a pure holding company named "
Livedoor Holdings" that oversaw the legal and financial management of its subsidiaries (reportedly 44 subsidiaries as of the end of 2005) including the new Livedoor. In 2008, Livedoor Holdings changed its name to "LDH Corporation."
Sale
During the upheaval in 2006 and 2007 rumors spread that Livedoor was preparing a $2 billion initial public offering in 2008. Several technology companies expressed interest in participating but the IPO never materialized. Livedoor instead put itself up for sale. In early 2010
South Korea
South Korea, officially the Republic of Korea (ROK), is a country in East Asia, constituting the southern part of the Korea, Korean Peninsula and sharing a Korean Demilitarized Zone, land border with North Korea. Its western border is formed ...
-based
NHN Corporation
NHN Corp. () is a Korean IT company that started its business as a game company called Hangame in 1999. Currently its main businesses can be categorized as Cloud, Fin-Tech (cross-border e-commerce, payment), Entertainment (game, webtoon, musi ...
bought Livedoor for a reported ¥6.3 billion.
Products and services bearing the Livedoor name today are owned and operated by Line Corporation, a Japan-based Internet company spun off from NHN Japan in February 2013.
Liquidation
After completing the sale of Livedoor and other subsidiaries and paying dividends to its shareholders,
LDH Corporation entered into voluntary liquidation by the shareholders' resolution in August 2011 and completed liquidation in December 2012 after distributing residual assets to its shareholders.
Offices
The headquarters of the original Livedoor company were located in the in
Nishi-Shinjuku
is a skyscraper business district in Shinjuku, Tokyo, Japan. This region was previously called .
Nishi-Shinjuku was Tokyo's first major foray into building skyscrapers with the first appearing in the 1970s with Keio Plaza Inter-Continental. It ...
,
Shinjuku
is a special ward in Tokyo, Japan. It is a major commercial and administrative centre, housing the northern half of the busiest railway station in the world (Shinjuku Station) and the Tokyo Metropolitan Government Building, the administration ...
,
Tokyo
Tokyo (; ja, 東京, , ), officially the Tokyo Metropolis ( ja, 東京都, label=none, ), is the capital and largest city of Japan. Formerly known as Edo, its metropolitan area () is the most populous in the world, with an estimated 37.468 ...
.
[会社概要 - 会社案内 - 株式会社ライブドア]
." Livedoor. Retrieved on December 14, 2011. "〒160-0023 東京都新宿区西新宿7-20-1 住友不動産西新宿ビル24F,25F(総合受付:24F)"
Map
Additional corporate offices were located on the 38th floor of the
Roppongi Hills Mori Tower at 10-1,
Roppongi
is a district of Minato, Tokyo, Japan, famous for the affluent Roppongi Hills development area and popular night club scene. A few foreign embassies are located near Roppongi, and the night life is popular with locals and foreigners alike. It is ...
6-chome,
Minato, Tokyo, 106-6138, Japan.
See also
*
Accounting scandals
Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "language ...
*
Line
References
External links
*
{{Authority control
Companies established in 1995
Companies formerly listed on the Tokyo Stock Exchange
Internet technology companies of Japan
Blog hosting services
Accounting scandals
2010 mergers and acquisitions