(Adds TSE request on Livedoor internal investigation)
By Yukari Iwatani Kane
TOKYO, Jan 18 (Reuters) - New allegations emerged on Wednesday that Livedoor Co. (4753.T: Quote, Profile, Research) tampered with its earnings statements, prompting a suspension of the Japanese Internet portal's shares and chaos in the stock market.
Local media reports said the high-profile company, known for its aggressive acquisition strategy, was now being investigated for window-dressing its revenues for the year ended September 2004 so it could disguise a loss as a profit.
Trading in Livedoor shares was suspended during the morning. The suspension was lifted in afternoon trade but the shares remained untraded as they faced a flood of sell orders.
The shares were marked down by the daily 100-yen limit for a second day to 496 yen. If they traded at that price, more than $1.8 billion of the company's market value would be wiped out.
Fallout from the Livedoor investigation triggered a sell-off in the broader stock market for a second straight day, forcing the early shut-down of the Tokyo Stock Exchange after the number of transactions threatened to exceed its computer system's capacity.
The benchmark Nikkei average closed down 2.94 percent.
"I can understand Livedoor's bewilderment, but we can't sympathise with them," Taizo Nishimuro, president and chairman of the Tokyo Stock Exchange, told reporters.
"We need more updated information and better disclosure," he said, adding that the bourse was prepared to take action if the company did not provide more details.
Investigators from the Tokyo District Prosecutors office and the Securities and Exchange Surveillance Commission raided Livedoor's offices late on Monday on suspicions that the company had spread false information to investors.
Livedoor has so far said only that it will make specific comments after it has finished conducting its own investigations regarding the allegations.
The Tokyo bourse said later on Wednesday it had asked Livedoor to submit its findings by Friday.
UBS Warburg analyst Atsushi Shinoda said in a research note on Tuesday that it had put its "buy" rating on Livedoor under review until the facts become clearer.
Monex Securities, a unit of Monex Beans Holdings Inc. (8698.T: Quote, Profile, Research), said it would not accept shares in Livedoor and its four separately traded group companies -- Livedoor Marketing (4759.T: Quote, Profile, Research), Livedoor Auto (7602.T: Quote, Profile, Research), Turbolinux Inc. (3777.OJ: Quote, Profile, Research) and Dynacity Corp. (8901.Q: Quote, Profile, Research) -- as collateral for margin trading.
Authorities have not provided further details about their investigation since the initial statement, but media reports said they were focusing on Chief Executive Takafumi Horie and company director Ryoji Miyauchi, who oversees merger transactions.
Miyauchi told reporters on Tuesday that he was prepared to take responsibility although he believed Livedoor operated within the law.
Sources familiar with the matter have said the investigation initially centred on the acquisition in 2004 of a publishing firm, Money Life, by a predecessor of Livedoor Marketing.
The sources said Livedoor and Livedoor Marketing made misleading statements about the acquisition, which had been made months before the announcement.
Livedoor, known for its aggressive acquisition strategy, has grown rapidly to amass a broad portfolio of Internet-related businesses from software to online financial services.
For the year ended Sept. 30, Livedoor reported a net profit that more than tripled from a year earlier to 15.48 billion yen as sales jumped 154 percent to 78.42 billion yen.
Horie, the company's maverick chief executive, has made many enemies in Japan's staid corporate and media world with his "bare-knuckled" business practices and brash personality.
The 33-year-old college dropout emerged as a media fixture in 2004 when he launched a bid to buy a professional baseball team.
He then shook Japan's conservative broadcast industry last year when he took advantage of a structural loophole to try to take control of the sprawling Fuji Sankei media empire. Both attempts failed.
He also ran for parliament in a general election last September but lost to an old-guard incumbent.
(Additional reporting by Mariko Katsumura)
