TOKYO (AP) – Takafumi Horie, chief executive of Japanese Internet portal Livedoor, was arrested Monday for alleged securities law violations in a scandal that has caused a week of turmoil in Japan’s stock market, where Horie had made his fortune.

The investigation into Livedoor also spread to Japan’s political sphere Monday, with politicians grilling Prime Minister Junichiro Koizumi over his political support of Horie, a brash, young entrepreneur who had run for a parliamentary seat last year.

The arrests of Horie and three other executives culminates a weeklong investigation into Livedoor Co. which began with a surprise raid on its Tokyo headquarters and 33-year-old Horie’s home last Monday.The probe has sent Tokyo share prices plunging – including Livedoor’s stock – just as global investors had been rushing back to buy Japanese stocks.

Horie, who has been hailed as a symbol of a new breed of Japanese leaders, has repeatedly denied wrongdoing. The 33-year-old CEO has become a TV star in recent years for his bold buyouts and for challenging Japan’s stodgy business elite.

“I have no recollection on any of the allegations. And I don’t even know how to comment because I have no idea what kind of investigation the media reports are coming from. That’s the situation,” Horie wrote in his blog over the weekend.

The Tokyo Prosecutors Office said Horie and three other Livedoor executives are accused of securities law violations, including releasing false information about affiliate companies to cover up losses at a subsidiary and boost its own stock price.

Livedoor is, among other things, suspected of pretending to have an affiliate acquire a company that was already under its control and selling stock in that company to doctor its books, prosecutors said.

Arrested with Horie were Ryoji Miyauchi, Fumito Okamoto and Osanari Nakamura, all 38. Livedoor spokesman Koichiro Ota said Livedoor had told the Tokyo Stock Exchange that it will continue to carry on business activities despite the arrests.

Last Wednesday police said that a body believed to be that of Hideaki Noguchi, 38, vice president of H.S. Securities Co., was found in a hotel in the southern state of Okinawa in a suspected suicide. Noguchi is a former employee of On the Edge, the predecessor of Livedoor. H.S. Securities is among the companies raided this week by prosecutors in connection with the Livedoor investigation.

The probe of the prominent new company spooked investors, and Japan’s benchmark Nikkei 225 stock index has tumbled 6.7 percent since the start of last week. On Monday, the Nikkei shed 336.04 points, or 2.14 percent, to close at 15,360.65 points.

Horie is widely seen as the face of a new corporate Japan – the antithesis of the stereotypical docile Japanese salaryman, who unquestioningly took orders and clung to their jobs under a tradition of lifetime employment.

His company, which offers Internet services such as Web shopping, grew rapidly by buying up other firms, often through stock swaps. Livedoor also split its own stock to make its shares more attractive to individual investors in a scheme that critics say artificially boosted the company’s shares.

Horie’s arrest is certain to be a blow for the many individual investors and youngsters, who had looked toward the unpretentious T-shirt-donning university dropout as an inspiration for a new kind of managerial leadership and glamorous lifestyle.

Instead, the investigation has reached into the government, as opposition politicians quickly seized the opportunity to attack the prime minister and what they called nation’s shoddy system of monitoring dubious corporate practices.

“The responsibilities lie heavy with the Financial Services Agency, the agency’s panel overseeing stock exchanges and other authorities that let Livedoor’s window-dressing go unchecked,” Seiji Maehara, leader of top opposition Democratic Party, said in a statement after the arrest.

At a parliamentary session earlier in the day, Maehara accused the ruling party of exploiting Horie’s fame and said it has some serious explaining to do to the public.

“The prime minister and the ruling party cannot avoid ethical questions,” he told legislators. “The prime minister must apologize to the people.”

Koizumi replied that the government was still monitoring the case because it was under investigation.

Horie ran as an independent, but top party officials stumped for him because what he symbolized seemed to fit well with Koizumi’s appeal for broader economic reform and fostering entrepreneurship. Horie ended up losing his particular race.

The Tokyo Stock Exchange placed Livedoor shares under a warning late Friday for not disclosing enough financial details about the recent allegations. The exchange said Livedoor will be monitored for possible delisting. The measures are to inform investors the company was “in danger of meeting delisting criteria,” TSE managing director Eisuke Nagatomo said late Monday.

Shares in Livedoor have lost more than half their value in the last week, plunging to 256 yen ($2.20) on Monday, down the maximum amount of 80 yen (69 cents) drop allowed for the day. A week ago, they were trading at 696 yen ($6.03).