Takafumi Horie, the chief executive of the Japanese internet group Livedoor, was arrested along with three other executives last night as the probe into allegations of breaches of securities exchange laws gathered pace following the apparent suicide of a key witness.

Prosecutors who had questioned Mr Horie during the day arrested the Livedoor chief together with Ryoji Miyauchi, the group's chief financial officer, and the presidents of two subsidiaries.

They are being detained at Kosuge Detention Center, some distance from Tokyo.

Livedoor executives are suspected of violating the securities exchange law by window-dressing the accounts of group companies and providing false information to manipulate the market.

The move yesterday follows a week of frenetic activity which began with the public prosecutor's raid on Livedoor's offices last Monday and led to a near collapse of the Tokyo Stock Exchange during the week, as nervous investors rushed to offload Livedoor and other internet stocks.

Prosecutors are believed to have moved faster than usual following the apparent suicide of a key witness who was found dead just two days after the raid.

The arrest of Mr Horie, who on Sunday wrote on his blog that he had not been involved in any of the alleged wrongdoing cited in the press, casts doubt over the future of the fast-growing internet services group and its once-popular founder.

Mr Horie and the internet services group he founded had come to symbolise a new generation of entrepreneurs, unafraid to challenge the status quo and with the potential to become the Google or Yahoo of Japan.

His brash style and unabashed pursuit of wealth had unleashed harsh criticism from more conservative members of the business community, who described his use of the tools of market capitalism as "financial alchemy".

The arrests are also likely to strengthen calls for stricter regulation and disclosure rules.

Livedoor, whose market capitalisation was down from Y730 billion ($6.4 billion) a week ago to Y268 billion yesterday, is also likely to face nervous creditors.