Murakami, known for squeezing corporate value out of the firms that he targets, admitted to the charges in a nationally televised news conference at the Tokyo Stock Exchange earlier in the day, and said he would resign immediately from his 400 billion yen (HK$27.76 billion) investment fund.

But in an emotionally charged appeal, the former trade bureaucrat said he was proud of his achievements and lashed out at "Japan Inc" as hostile to those who challenged the system.

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"This time I got a red card," he said. "I am going to leave the pitch at once and reflect. I hope Japan will one day become a country that accepts people who challenge the status quo."

Murakami, 46, and Livedoor chief executive Takafumi Horie, 33, had become symbols of a more freewheeling style of capitalism that is gradually taking hold in Japan. Both had been praised for challenging entrenched corporate customs that put shareholder value behind protecting management and employees. But they also came under fire for their aggressive pursuit of profits.

Murakami said he was surprised when prosecutors accused him of trading on advance knowledge of a high- profile takeover bid launched by Horie last year, but concluded after reviewing his actions that they could be interpreted as breaking securities laws.

"Rather than spend two years fighting about it in court, I decided the best thing would be to agree with the prosecutors," he said. "I consider myself a pro among pros in this securities market. I had to consider the outside possibility that I had made a mistake."

He faces up to three years in prison or a fine of up to 3 million yen.

Horie and other executives were arrested in January and have been charged with breaking securities laws in a separate deal. Horie denied wrongdoing.

Murakami said Horie and another Livedoor executive told him in late 2004 that they hoped to launch a takeover bid for Nippon Broadcasting System, a radio broadcaster affiliated with Japan's largest private media group in which Murakami's fund owned shares. Shares in NBS surged after Livedoor launched its bid last February.

The fund, which accumulated more shares in the months before the bid, sold its stake at a profit to Livedoor and to market investors. "I didn't think Livedoor had the wherewithal to actually go through with it," said Murakami of his initial conversation with the Livedoor executives. "I didn't buy the [NBS] shares because of it, but it's true that I heard what I heard."

Livedoor ultimately withdrew its bid for NBS after a fight that rocked corporate Japan. It settled for a deal that gave control to Fuji Television Network, an NBS affiliate that was fighting Livedoor for control of the radio firm.

Murakami said that at the time he had no intention of breaking the law. Despite his defiant tone, he said he would not return to securities trading.

His fund, around 60 percent of whose investors are US universities, had since its inception doubled in size to be worth around 400 billion yen.

Formally known as MAC Asset Management and now headquartered in Singapore, the fund will continue to operate despite his resignation, he added.

REUTERS