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Billionaires Going Broke
Warren Buffett

picWarren Buffett experienced a 62 percent profit drop in his holding company in 2008. Buffett released his annual letter to Berkshire Hathaway Inc. shareholders Saturday morning, and detailed the worst of his 44 years leading the Omaha-based company. Buffett wrote he's certain "the economy will be in shambles throughout 2009 — and, for that matter, probably well beyond." Berkshire had sharply lower profit and a nearly $7.5 billion investment and derivative loss.

Paul Allen

picCharter Communications, the cable company that Allen is said to have a 50% stake in, has filed for bankruptcy, after not making interest payments of $73 million dollars. The bankruptcy reduced the company's debt by 8 billion dollars. Reportedly, Charter had 21 billion dollars in long term debt. For a look at Charter's stock price free fall, click here. Allen did receive some much-needed good news regarding Charter in the form of President Obama's stimulus bill -- which should net him some tax savings.

Last month, Paul Allen reportedly laid off 50 employees at Vulcan, 9 percent of the total staff.

Here's Microsoft's stock price history. As recently as April 2008, Microsoft was trading at 31. Today, it trades at 17. According to the most recent report I could find, Paul Allen owned 136 million shares of Microsoft stock as recently as 2006. Obviously this number could have changed dramatically in the last 3 years. But that stake, at last April's stock price, would have been worth roughly 4.2 billion dollars. Based on today's stock price, that holding would be worth roughly 2.2 billion dollars.

On Valentine's Day it was announced that Paul Allen sold off his remaining stake in DreamWorks Animation Studio, ending a fifteen year business relationship.

Kirk Kerkorian

picWealth lost in 2008: $11.9 billion
The 91-year-old investor recently disclosed he sold a large portion of his shares of Ford at a significant loss. Kerkorian's largest investment, a 53% stake in casino outfit MGM Mirage, is down 87% this year.

Larry Ellison

picWealth lost in 2008: $8.2 billion
Ellison has watched his shares of software giant Oracle fall 28% in the last 11 months. The titan's other public holding, NetSuite, is down 79% this year.

Carl Icahn

picWealth lost in 2008: $5.1 billion
Since taking his real estate, car parts and hedge fund outfit public in 2007, the rabble-rousing investor has been buffeted by broad market declines and, most recently, steep investor withdrawals. According to recent reports, investors in his hedge fund plan to redeem about 15% of the fund's assets at year-end. Shares of Icahn Enterprises L.P. are down 62% since January.

Rupert Murdoch

picWealth lost in 2008: $4 billion
The information mogul's News Corp. shares have fallen 60% this year as a dearth of advertising revenue crunches media stocks.

Min Kao

picWealth lost in 2008: $3.4 billion
Despite rising revenues, shares in GPS maker Garmin are down 82% since January. Kao's 20% stake is worth $770 million today

Maurice "Hank" Greenberg

picWealth Lost in 2008: $2.3 billion
Bogus risk models and an equity-diluting government bailout at insurance giant AIG combined to wreck the spry insurance veteran's fortune. With shares down 97%, his formerly multi-billion dollar stake is worth less than $100 million today

Sumner Redstone

picSumner Redstone's family holding company, National Amusements Inc., has reached an agreement with its lenders, according to people familiar with the situation, ending months of uncertainty over the fate of the family's troublesome debt pile.

Duncan Niederauer

picLike just about everyone on Wall Street, the New York Stock Exchange had a miserable 2008. The institution turned unprofitable for the first time in memory and its stock price sank by two-thirds. Nonetheless, the exchange handsomely paid Chief Executive Duncan Niederauer. It awarded him $7.1 million in total compensation, according to a filing with the Securities and Exchange Commission, of which $4 million was “performance bonus.” The exchange’s board awarded Mr. Niederauer 20% less than the $5 million performance bonus targeted for Mr. Niederauer because hard times required it cuts its bonus pool.

Andrea Orcel

picAs bad as 2008 was for Merrill Lynch & Co., it was very good for Andrea Orcel, the firm's top investment banker. Although Merrill's net loss ballooned to $27.6 billion last year, Mr. Orcel, 45 years old, was paid $33.8 million in cash and stock, just shy of his pay in 2007. While Merrill staggered, 11 top executives were paid more than $10 million in cash and stock last year, say people familiar with the situation. An additional 149 received $3 million or more.

Bjorgflur Gudmundsson

picThe October collapse and government seizure of Iceland's second largest bank wiped out the $1.1 billion fortune of Gudmundsson, the bank's chairman and biggest shareholder, along with his son Thor. His holding company, Hansa, has since gone into voluntary liquidation and is looking for a buyer for its U.K. soccer team, West Ham. It's not the first time he's run into trouble. A former shipping executive, he was charged with fraud and embezzlement in relation to the firm's 1985 collapse, and was eventually found guilty on five minor counts and sentenced to 12 months' probation.

Anil Ambani

picThe biggest billionaire gainer last March is now the year's biggest loser. Ambani lost $30 billion in the past nine months, more than anyone in the world. Stock of his telecom company dropped after his estranged brother helped scuttle a deal with African telecom MTN. It's quite an achievement in a year in which three of his fellow countrymen--estranged brother Mukesh, steel tycoon Lakshmi Mittal and Indian KP Singh, all of whom ranked earlier among the world's 10 richest--lost more than $20 billion apiece.

Oleg Deripaska

picFormer metals trader survived Russia's gangster wars but may not withstand collapsing markets and heavy debts of at least $14 billion. Russia's one-time richest man recently received a $4.5 billion loan from a state-controlled bank in order to keep his 25% stake in Norilsk Nickel, which faced a margin call by Western banks from which he had borrowed. Other margin calls forced him to divest a $1.5 billion stake in Canadian carmaker Magna International and a $500 million stake in German construction company Hotchief. He's also selling stake in insurance company Inogsstrakh.

Anurag Dikshit

picDikshit designed the software for PartyGaming's successful PartyPoker game, which allowed live gambling over the Web. He left the company and sold a chunk of shares in 2006, the year the U.S. government banned gaming. He recently pleaded guilty to violating U.S. gaming laws and agreed to forfeit $300 million. He could face up to two years in jail but apparently won't be sentenced until 2010. He has already paid $100 million of his fine and will pay the rest in two installments next year.

Luis Portillo

picSpain's short-lived real estate gold rush left one of its most visible speculators holding a nearly empty bag. Portillo--who acquired real estate firm Inmocaral three years ago, then led the takeover of the larger Inmobiliaria Colonial in 2006--personally borrowed a reported $1.4 billion from more than a dozen banks during boom times, using his stock as collateral. He resigned as chairman in December 2007 and then tried to sell his stake to a Dubai fund earlier this year. When the deal fell through, he had to sell most of shares to pay debts.

David Ross

picEarlier this month, Ross notified four public companies, in which he was a major shareholder and director, that he had pledged his shares against personal loans. He has resigned from three of the four boards thus far. The entrepreneur, who co-founded U.K. retailer Carphone Warehouse, apparently began using his shares as collateral several years ago to fund real estate investments. He got into trouble this year when property values, along with Carphone shares, plunged, making it difficult for him to meet debt obligations.

Tulsi Tanti

picThe wind was knocked out of Tanti and his wind firm, Suzlon Energy, amid reports about the poor quality of its wind turbine blades, some of which cracked. The company's $25 million provision to fix faulty blades didn't do much to boost investor confidence. The stock has plunged 80% since March. Until recently a rising star among India's wealthy entrepreneurs, Tanti, the firm's chairman, announced in December that he was taking over daily operations "to navigate us through the challenging business environment."

Larry Yung

picOne of China's best-known capitalists, Yung suffered a blow to his reputation when his Citic Pacific announced a profit warning in October in connection with bad currency debts. In 10 days, the stock dropped more than 80%. It has since rebounded (though it is still down by more than half), thanks in part to support from its parent company, Citic Group, which agreed to provide credit. According to reports, Yung's daughter was allegedly aware of at least one of the authorized bets that cost the company billions.

Konstantin Zhevago

picHigh-flying Ukrainian wunderkind has lost $3 billion in past several months. Shares of his iron ore producer Ferrexpo, which debuted in London in May 2007, have tanked 89% since March. The stock's decline brought JPMorgan Chase to his door, recalling a loan. To raise cash, Zhevago sold a 20% stake in Ferrexpo at a 30% discount. Soon after, Ferrexpo's CEO quit, and Zhevago took his spot. It's probably a good thing the 35-year-old has a day job as a deputy in Ukraine's parliament and is an ally of Prime Minister Yulia Tymoshenko.


Is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions.

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