The Rising Ranks of Rich

May 14, 2001 (PLANSPONSOR.com) - America continued to assert itself in the ranking of the worlds' wealthiest, no doubt helped along by burgeoning 401(k) investments and stock options, according to this year's World Wealth Report.

The report, published by Merrill Lynch and Cap Gemini Ernst & Young, found a 6% increase in the wealth of high net worth individuals globally to US$27 trillion last year despite flagging global equity markets.

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Some 180,000 people joined the ranks of the high net worth individuals (HNWI), or those with more than $1 million in investable assets, excluding real estate, bringing the total of high net worth individuals to 7.2 million people, up 2.9% from the previous year.

The wealth of ultra high-net worth individuals (UHNWI), who have investable assets of more than $30 million, increased 6% to $8.37 trillion. The number of people in this group rose 3% to an estimated 57,000 people.

The first quarter of last year saw strong growth in the creation of HNWIs continued, with an additional 260,000 millionaires created by the end of March 2000. However, as the major indices began to slide, the number of new millionaires fell by over a third in the remaining three quarters of 2000.

The report forecasts growth of 8% annually, in the HNWI group over the next five years, reaching US$39.7 trillion in 2005.

North America

More than a third, or 35% of the world’s HNWIs reside in the US or Canada. Their ranks swelled by 2.4%, reaching 2.54 million individuals in 2000, while the value of their combined wealth increased by 9% to $8.8 trillion despite the fall in the equity market.

The increase in wealth can be attributed to:

  • corporate profits distributed in the form of bonuses early in 2000
  • with generous stock option packages, and
  • strong growth in Gross Domestic Product.

The North American market share of the world’s HNWI’s wealth accounts for 32.7% of the global group’s wealth. It has grown 313% in the last 25 years, and is forecast to grow a further 48% to $13 trillion by the end of 2005.

There was an almost 3% rise in the number of Canadian HNWIs to an estimated 177,000 people at the close of 2000, largely due to the 4.2% increase in the value of the Canadian stock market last year, the fourth best performing market in the world last year.


 

Union-Owned Bank Seeks Freeze of Enron Exec Accounts

December 5, 2001 (PLANSPONSOR.com)- Charging that Houston energy trader Enron's economic problems represented a "grotesque fraud," Amalgamated Bank on Wednesday sought to freeze the bank accounts of Enron senior executives.

In a lawsuit filed in US District Court in Houston, the bank, owned by the Amalgamated Clothing and Textile Workers Union, said insiders gained about $1.1 billion from the sale of more than 17.3 million shares of stock over the past three years, according to Reuters. Enron’s market value peaked at almost $80 billion in August 2000, and is now worth less than $1 billion.

Amalgamated, which manages worker retirement funds, sought to freeze the Enron executives, accounts, alleging they reaped huge profits by artificially inflating the stock price of the once-mighty company.

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Among the 29 accounts targeted to be frozen was that of board member Wendy Gramm, former chairman of the Commodity Futures Trading Commission and wife of Senator Phil Gramm (R-Texas).

Representing Amalgamated in the suit was the law firm of Milberg Weiss, which also represented the bank in a suit last year accusing top executives at Sprint and WorldCom of using their failed merger to reap hundreds of millions of dollars in early-vesting stock options.

The lawsuit was the latest of about 15 lawsuits filed against Enron, and marks an increase in the number of defendants and the amount of money they were accused of gaining. The other lawsuits accused the insiders of earning about $73 million.

In addition, a number of larger pension funds that invested in Enron, which filed for Chapter 11 bankruptcy protection on Sunday, are reportedly considering legal action, according to published reports. 

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