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Source: Forbes
On the morning of July 27, Cantor Fitzgerald’s senior CEO Howard Lutnick took the stage at the 2024 Bitcoin Conference in Nashville, Tennessee.Thousands of cryptocurrency enthusiasts gathered together, and many “royals” from the MAGA camp were gathered, including Vivek Ramaswamy and Robert F. Kennedy Jr.and Donald Trump himself.
Lutnik, 63, is burly and sparsely haired, passionately defends the dollar-pegged cryptocurrency Tether in a 20-minute speech and announces the launch of a $2 billion financing business to invest in Bitcoinleverage support provided by the user.But before making this bold statement, he once again told a story that people are not unfamiliar with.
On the morning of September 11, 2001, he was sending his eldest son who had been to kindergarten on his first day. At this time, a plane crashed into the World Trade Center building, with Cantor Fitzgerald’s headquarters located on the 101-105th floors of the building.All 658 employees in the office were killed, including his younger brother Gary and best friend Doug, as well as 28 brothers and a pair of sisters.Lutnik recalled how intimate everyone was and talked about his recruitment strategy: “We have an unusual model, we just want to work with people we like.” The tragedy inspired his sense of mission.Lutnik promised to distribute 25% of the company’s profits to the families of the victims within five years, and eventually paid $180 million.
23 years later, Lutnik still regards himself as a model of patriotism and perseverance.Many people think so too.On Tuesday local time, Trump announced the nomination of Lutnik as Commerce Secretary through his social media platform Truth Social.He did not specifically mention Lutnik’s business acumen or trade policy knowledge, but instead reviewed the “9/11” incident, saying Lutnik “is an incentive for the whole world” and said that he “concentratedly embodies the face of the situation.”The tenacity of the tragedy in unimaginable tragedy”.
His story is true and of course it is very inspiring.
But Lutnik also has a less bright side. By looking through the court documents and talking to people who have had business dealings with him, you can see some clues.These people claim that over the years, Lutnik and his company have sucked money from customers, investors and colleagues through various means.According to a former partner, Lutnik’s actions made him “the most hated person on Wall Street.”His business empire is worth billions of dollars, including two listed companies and an unlisted investment bank, but is full of self-dealing and decades of poor record keeping problems, and internal struggles continue to this day.A former employee said: “What the whole company does is to cheat people, to squeeze people dry.”
Cantor Fitzgerald operates in a partnership, but the final decision-making power is undoubtedly in the hands of Lutnik.Currently, he has a net worth of more than $1.5 billion to himself, but he has eroded his partners’ profits.
“He does whatever he wants,” recalled a former partner.
According to a federal court filing last year, Lutnik had asked employees to convert 10% to 20% of their compensation into a partner share, which sounds good, but it encountered twists and turns when employees tried to withdraw the money.The agreement allegedly gave Lutnik a unilateral decision, where he could withhold funds from his employees on the grounds of breach of the terms of competition, which were defined very broadly.It is estimated that 40% of employees failed to get all their money back after leaving.The lawsuit documents say this is a strategy to deceive employees and fatten Lutnik.Another former colleague said: “He will give it to you when he wants to give you money; if he doesn’t want to give it, you don’t want to get it.” Lutnik’s company has filed a motion to revoke the lawsuit.
Lutnik said through a spokesperson that he refused to be interviewed on this article.However, some people spoke for him, saying that some people may just be not strong enough to withstand his tough style, or are not smart enough to understand the partnership agreement (an executive estimated that the agreement must have 700 pages).However, even those who support Lutnik are reluctant to express their views publicly.”People are very afraid of him. I have witnessed it with my own eyes – I have seen bullying and aggressive behavior.”
This aggressive spirit may be the characteristic that Trump values when choosing a Commerce Secretary – there is loyalty above fighting, so that’s even more serious.
At the beginning of 2021, many business people couldn’t wait to draw a clear line with Trump, but Lutnik was still on his side.At that time, Trump began to build a media and technology company, dreaming of creating a social platform that imitates Twitter, but he obviously didn’t want to pay too much money by himself.Lutnik looks like a perfect investor.After more than 40 years of financial experience, he has extensive experience and is good at leveraging various Wall Street trends, including the latest special purpose acquisition companies (SPACs, injecting liquidity into private companies and listing them).
Two contestants who participated in Trump’s Apprentice program joined in to help him build the business.They held a meeting with Lutnik on Zoom and Forbes received minutes.”The meeting worked great. Howard asked us to give up other SPACs. He will fly to meet the president on March 30.”
Trump and Lutnik have known each other for many years and they have many things in common.
They all accumulated their initial wealth in New York in the 1980s, one on real estate and the other on Wall Street.Their business methods are also very similar, they all jumped repeatedly between different money-making plans, and sometimes they also attracted the attention of regulators due to suspected fraud, poor record keeping or money laundering.Both are hardliners and both have a special liking for luxurious life.Lutnik once lived in an apartment in Trump Palace, with a British butler, then moved into a 10,600-square-foot townhouse with Jeffrey Epstein(Jeffrey Epstein)’s residence is only separated by a wall.(A spokesman said Lutnik “had never been associated with Epstein.”)
But there is also an important difference between Trump and Lutnik.
Trump is used to putting aside details—in his first term, the aides learned to subtract while making reports, listing only key points.Lutnik, on the contrary, was extremely obsessed with the details.His tentacles have explored almost every corner of Wall Street – stocks, bonds, swaps, futures, derivatives, cryptocurrencies and SPACs, meticulously tapping small profits from large-scale transactions and forging his own successful career.
This difference becomes a disagreement in the discussion of Trump’s media business.Trump was never the smartest one when it comes to examining partners, and eventually he received funds from a small investor who was later accused of committing fraud in the transaction by the SEC.Lutnik found another investment target and found a company similar to Trump’s social platform Rumble.This pro-MAGA platform is more like a copycat YouTube than Twitter.
In September 2022, Lutnik listed it through Cantor Fitzgerald through SPAC, making a big profit with a favorable trading structure, while small investors with inexperienced suffered losses.”If you can’t catch up with Howard, you’re just a piece of garbage on his way forward,” said a former Cantor partner.
Lutnik is now working with Trump again, and his attention to details is revealed again.
Trump elected him as co-chair of the transition team, and later nominated him as Secretary of Commerce.When the president-elect focused on his social media account and headline appointments, Lutnik buried himself in recruiting for lower-level positions that were truly responsible for the daily operations of the government.
Cantor Fitzgerald has business dealings with various federal agencies and departments, and there is a clear conflict of interest.However, when Trump’s team picked staff for institutions such as the Commodity Futures Trading Commission (CFTC) — which had fined Lutnik’s company $6 million in 2022 for poor record keeping — Lutnik doesn’t seem to be tooCare about the complaints of the ethical watchdog, but continue to advance your own plans.A former employee said: “He only cares about himself. Trump is president for his own benefit, and Howard Lutnik does business for the same purpose, two people are equally swayed.”
Lutnik is the son of a university professor, with an older sister and a younger brother.He grew up on Long Island and showed his ability to make money since childhood.When he was a child, he would buy new baseball cards in boxes and mix them with the old cards and repack them for sale.Some will be “great prize packs” with five new cards; some will be “waste bags” with only one new card.Other kids like this surprise, but Lutnik’s happiness comes from certainty—he knows that repackaged cards can be sold at three times the cost of a new card.
As we enter our teenage years, life becomes hard.Lutnik’s mother died at the age of 16, and his father also died at the age of 18, leaving him and his sister to take care of his 15-year-old brother Gary.Howard Lutnik continues to study at Haverford College, Pennsylvania, and Gary, who attends boarding school, will go to find him on weekends.
He graduated in 1983 with a degree in economics and then returned to New York to join Cantor Fitzgerald, led by distinctly personal founder Bernie Cantor, who also became his mentor.Canto loves arbitrage, constantly moving from one thing to another, always looking for an advantage.He eventually found a niche in the trillion-dollar Treasury market and became a broker.Although the work itself is not glamorous, Canto lived a luxurious life and also stayed in the White House as a guest of Bill Clinton.
Lutnik quickly impressed.Two years after graduating from college, he has already made deals for some of Canto’s private clients.A former company executive told Forbes nearly 30 years ago: “Berney can’t hear anyone say the kid is bad. If you come up with evidence that Howard crossed the line, he will say, ‘Don’t worry, he’s stillYoung, let him learn slowly. ‘” In 1991, 30-year-old Lutnik took over the company’s daily management.
Controversies followed one after another.
Lutnik recruited many friends and family into the company, including his younger brother Gary.According to colleagues, Gary sometimes buys the bonds before the client places an order and then quickly resells them to the client for profit.Such behavior is obviously illegal in the stock market, but may be allowed in the Treasury market, despite moral controversy.
In 1994, the Securities and Exchange Commission fined Cantor Fitzgerald $100,000 for improper records of “risk-free investment” related transactions in Treasury bond auctions.Three years later, the company agreed to pay $500,000 to settle an allegation that it assisted in fraud, although it did not acknowledge or deny the findings.
Even Bernie Cantor’s family eventually had a fight with Lutnik.
About the time after Lutnik became CEO, he convinced Canto to change the company from a business to a partnership.In 1995, as Canto’s health worsened, Lutnik joined forces with two other partners to try to acquire shares in the Canto family.The deal was ultimately failed, and Lutnik launched the “Incapacity Committee” agreed in the partnership agreement in January 1996.The five-member committee voted to strip founder Canto of control of the company, with three votes in favor and two abstentions.Cantor’s wife, Iris, was one of the abstainers and she subsequently filed a lawsuit.She gained a large sum of cash but lost control of the company and developed a deep distrust of Lutnik, even forbidding him from visiting Canto’s cemetery.
Lutnik turned this page and started a new life.
He celebrated his 35th birthday at the New York Metropolitan Club on the weekend after Canto’s death.After taking charge of the company, he expanded Cantor Fitzgerald from a single treasury business to bonds, derivatives, swaps, futures and other fields.In 1996, the company’s revenue tripled from 1991 to nearly $600 million.That same year he also launched an electronic brokerage platform called eSpeed based on his prospects for the future, a move that later saved the company when the tragedy occurred.
Lutnik likes to enjoy life freely.
In the mid-1990s, he lived in the Trump Palace, the tallest building in Manhattan’s Upper East Side.When he is not at home, he can often be found in the office on the 105th floor of the World Trade Center.But something unimaginable happened – at 8:46 am on September 11, 2001, an airplane crashed into the 93-99 floors.
People’s compassion helped the company through the difficulties.
After the 911 incident, the electronic platform eSpeed market share increased, but then lost all because it launched a new service where bond buyers pay more than three times the standard rate to be traded first.The result was that the customer ran away, and eSpeed eventually gave up on this practice.Lutnik continued to use eighteen martial arts to optimize and adjust the structure of his business empire.
In 1999, Lutnik listed eSpeed and then merged it with other brokerage businesses in 2008 to form a public company called BGC Partners.However, the market was skeptical of the operation and lowered its valuation of BGC, an investor described the phenomenon as a “Howard Lutnik discount.”Lutnik found a way to bypass the problem, spinning eSpeed out of BGC and sold it to the Nasdaq OMX Group in 2013, trading at $750 million in cash and stocks paid in 15 years.
It turns out to be wise to properly isolate Lutnik’s wealth from his reputation.
As Nasdaq stocks rose, these paid stocks became more valuable, making the transactions eventually exceed $2 billion, which was higher than the market value of BGC at that time.To help him manage it all, Lutnik hired an right-hand man, Anshu Jain, who served as co-CEO of Deutsche Bank from 2012 to 2015.During his tenure, the German agency provided Trump with $340 million in financing.
Lutnik has also actively entered the real estate sector, acquiring several businesses and combining them into Newmark, which was spin-off from BGC in 2018.Newmark has grown into a multi-billion dollar real estate services company that provides services such as sales, loans, leasing and property management.One of its clients is the Trump Group, which has hired Newmark to help sell its hotel in Washington, D.C.In addition to the real estate business, Newmark also acquired an affiliated asset during the spin-off – BGC’s earnings rights in Nasdaq shares.These shares pay earnings in December, which can generate about $100 million in revenue each year.
Such a deal requires mind, and even Lutnik’s enemies admit that he is smart.”The brain is absolutely brilliant,” said one opponent.“Very, very smart,” another added.”I can only say,” said the third, “Howard worked hard and usually got what he wanted, no matter what method he used.”
But these methods do not satisfy everyone.
In June 2021, Lutnik allegedly asked the Newmark board’s compensation committee to pay him a $50 million bonus on the grounds that he contributed to the Nasdaq deal, which was four years after it went public on Newmark.It was reached before.A lawsuit filed later by shareholders said the committee initially decided to postpone the consideration of the bonus.The committee chairman (his husband died in the 9/11 incident) revealed the news to Lutnik.It is said that Lutnik showed off his excellence, which made everyone know that the boss was unhappy.Eventually the board reconsidered the issue.Lutnik received a $20 million bonus in 2021 and will receive $10 million a year for the next three years, totaling $50 million — exactly what he asked for.
The board of directors, Lutnik, who chaired, said the lawsuit had no basis and defended the decision to give him a bonus, saying the large bonus would inspire Lutnik to actively work.This may indeed have done such an effect within a few years.The last bonus will be issued at the end of 2024.This time point is better for Lutnik. He is likely to leave the company about a month after receiving the bonus and go to the presidential cabinet for a high salary.
