Howard Lutnick, chairman and CEO of BGC Companions Inc., speaks in the course of the Piper Sandler World Trade and FinTech Convention in New York Metropolis, U.S., June 8, 2022.
Brendan McDermid | Reuters
WASHINGTON — The Securities and Trade Fee charged international monetary companies agency Cantor Fitzgerald with violating laws associated to disclosures by so-called blank-check firms earlier than they raised cash from the general public.
Cantor Fitzgerald’s chairman and CEO, Howard Lutnick, was just lately nominated by President-elect Donald Trump to guide the Commerce Division. Lutnick is co-chair of Trump’s transition group.
The SEC mentioned that Cantor agreed to settle the case by saying the agency wouldn’t violate the related securities legal guidelines once more and pay a $6.75 million civil penalty. The agency didn’t admit or deny the fees, which relate to sure antifraud and proxy provisions of federal securities legal guidelines.
It was unclear Thursday night time whether or not the Trump transition vetting group was conscious of the SEC investigation of Cantor when the president-elect said he would nominate Lutnick to function secretary of Commerce.
Howard Lutnick, Chairman and CEO of Cantor Fitzgerald gestures as he speaks throughout a rally for Republican presidential nominee and former U.S. President Donald Trump at Madison Sq. Backyard, in New York, U.S., October 27, 2024.
Andrew Kelly | Reuters
An SEC order launched Thursday discovered that Cantor induced two blank-check firms, that are also called SPACs, to falsely deny in regulatory filings having had contact or substantive discussions with potential merger targets earlier than these SPACs’ preliminary public choices.
SPACs are shell firms that haven’t any underlying enterprise earlier than they probably merge with a goal firm that has enterprise operations.
The 2 SPACs managed by a group of Cantor executives raised $750 million from buyers in IPOs earlier than they merged with View Inc. and Satellogic, the SEC mentioned.
The SEC mentioned that the group of Cantor executives and staff of Cantor subsidiaries looked for potential firms for the 2 SPACs to merge with, and had “substantive discussions” with potential targets. These discussions occurred earlier than the blank-check firms had been registered and started their IPOs.
“This enforcement motion displays the simple proposition that any disclosures about substantive discussions with potential targets have to be materially correct,” mentioned Sanjay Wadhwa, performing director of the SEC’s Division of Enforcement, on Thursday.
“Cantor Fitzgerald misled buyers a couple of crucial funding consideration by repeatedly stating in public filings that it had not recognized or approached any potential merger targets, regardless of having had substantive discussions with a number of non-public firms relating to a possible merger, together with with the businesses with which its SPACs finally merged,” Wadhwa mentioned in an announcement.
Cantor spokesperson Erica Chase, in an e mail to CNBC, mentioned, “No investor was ever harmed by the alleged points described within the order.”
“We’re happy to have concluded this matter by mutual settlement with the SEC,” Chase mentioned.
The Trump transition didn’t instantly reply to a request for touch upon the case.
