Source: Forbes
On the morning of July 27, Howard Lutnick, the senior CEO of Cantor Fitzgerald, took the stage at the 2024 Bitcoin Conference held in Nashville, Tennessee. Thousands of crypto enthusiasts gathered, including many "royals" from the MAGA camp, such as Vivek Ramaswamy, Robert F. Kennedy Jr., and Donald Trump himself.
The 63-year-old Lutnick, with his burly build and thinning hair, passionately defended the Tether cryptocurrency pegged to the US dollar in a 20-minute speech, and announced the launch of a $2 billion financing business to provide leverage support for Bitcoin investors. But before making these bold statements, he recounted a story familiar to many.
On the morning of September 11, 2001, he was taking his eldest son to his first day of kindergarten when a plane hit the World Trade Center towers, where Cantor Fitzgerald's headquarters was located on floors 101 to 105. All 658 employees in the office were killed, including his brother Gary and his best friend Doug, as well as 28 pairs of brothers and one pair of sisters. Lutnick reminisced about how close-knit they were, and talked about his hiring strategy: "We had an unusual pattern, we only wanted to work with people we liked." This tragedy fueled his sense of mission. Lutnick promised to allocate 25% of the company's profits to the families of the victims over five years, ultimately paying out $180 million.
23 years later, Lutnick still sees himself as a model of patriotism and resilience, and many others do too. On Tuesday local time, Trump announced through his social media platform Truth Social that he was nominating Lutnick as Secretary of Commerce. He did not particularly mention Lutnick's business acumen or trade policy knowledge, but mainly reviewed the "9/11" incident, saying Lutnick "is an inspiration to the world" and that he "embodies the spirit of resilience in the face of unimaginable tragedy".
His story is true, and certainly inspiring.
But Lutnick also has a less than bright side. A review of court documents and conversations with those who have done business with him reveal some clues. These people claim that over the years, Lutnick and his company have extracted funds from clients, investors, and colleagues through various means. According to a former partner, Lutnick's actions have made him "the most hated person on Wall Street." His business empire, worth billions of dollars, including two public companies and an unlisted investment bank, is rife with self-dealing and persistent record-keeping issues, with internal conflicts continuing to this day. A former employee stated: "The whole company is just about screwing people, just about squeezing people dry."
Cantor Fitzgerald operates as a partnership, but the ultimate decision-making power is undoubtedly in Lutnick's hands. Currently worth over $1.5 billion, he pays himself a king's ransom, which has eroded the profits of the partners.
"He does whatever he wants," recalled a former partner.
According to a federal court filing last year, Lutnick had asked employees to convert 10% to 20% of their compensation into partnership shares, which sounded good, but when employees tried to withdraw this money, they encountered obstacles. The agreement allegedly gave Lutnick unilateral decision-making power, allowing him to withhold funds from departing employees on the grounds of violating non-compete clauses, which were defined very broadly. It is estimated that 40% of employees did not receive their full funds upon leaving. The lawsuit documents claim this was a scheme to deceive employees and enrich Lutnick. Another former colleague said, "He'll only give you money when he wants to; if he doesn't want to, you're not getting it."
Lutnick declined to be interviewed for this article through a spokesperson. However, some have spoken up for him, saying that some people may simply not be strong enough to withstand his tough style, or smart enough to understand the partnership agreement (a senior executive estimated it to be around 700 pages). Even those who support Lutnick, however, are unwilling to publicly express their views. A former colleague said, "People are very afraid of him. I witnessed it all - I saw the bullying, I saw the aggressive behavior."
This combative spirit may be the very trait that Trump values in selecting a Commerce Secretary - above and beyond loyalty.
In early 2021, many business leaders were eager to distance themselves from Trump, but Lutnick remained on his side. At the time, Trump was working to set up a media and technology company, dreaming of creating a Twitter-like social media platform, but he clearly didn't want to put up too much of his own money. Lutnick seemed like the perfect investor. With over 40 years of financial experience, he was adept at leveraging various Wall Street trends, including the latest special purpose acquisition companies (SPACs) to inject liquidity into private companies and take them public.
Two contestants from Trump's "The Apprentice" TV show joined in to help build the business. They held a Zoom meeting with Lutnick, which Forbes obtained the minutes of. The Trump team wrote on it: "Meeting went extremely well. Howard made us drop other SPACs. He will fly in to meet the President on March 30."
Trump and Lutnick have known each other for many years and have much in common.
They both amassed their initial wealth in 1980s New York, one in real estate, the other on Wall Street. Their business practices are also similar, repeatedly jumping between different money-making schemes, sometimes drawing the attention of regulators for alleged fraud, poor record-keeping, or money laundering. They are both hardliners and share a penchant for luxurious lifestyles. Lutnick once lived in a Trump Palace apartment with a British butler, and later moved into a 10,600-square-foot townhouse, just one wall away from Jeffrey Epstein's residence. (A spokesperson stated that Lutnick "has never had any association with Epstein.")
But there is one key difference between Trump and Lutnick.
Trump is accustomed to glossing over details - in his first term, aides learned to do less in their reports, just listing the key points. Lutnick, on the other hand, is exceptionally meticulous about minutiae. His tentacles reach almost every corner of Wall Street - stocks, bonds, swaps, futures, derivatives, cryptocurrencies, and SPACs, meticulously extracting tiny profits from large-scale transactions to build his successful business.
This difference became a point of contention in the discussions about Trump's media business. In terms of vetting partners, Trump has never been the sharpest, and ultimately he obtained funding from a small investor who was later accused by the SEC of fraudulent trading. Lutnick, on the other hand, sought out a different investment target, finding a MAGA-friendly platform similar to Trump's social media platform, Rumble, which is more like a knockoff YouTube than Twitter.
In September 2022, Lutnick used Cantor Fitzgerald to take Rumble public through a SPAC, making a tidy profit through a favorable deal structure, while less experienced small investors suffered losses. A former Cantor partner said, "If you can't keep up with Howard, you're just a piece of trash in his path."
Lutnick is now collaborating with Trump again, and his attention to detail is once more on full display.
Trump selected him to serve as co-chair of the transition team, and then nominated him as Secretary of Commerce. While the president-elect was focused on his social media accounts and grabbing headlines with his appointments, Lutnik was busy recruiting for lower-level positions that are actually responsible for the day-to-day operations of the government.
Cantor Fitzgerald has business dealings with various federal agencies and departments, clearly posing conflicts of interest. However, when the Trump team was selecting personnel for agencies like the Commodity Futures Trading Commission (CFTC) - which had fined Lutnik's company $6 million in 2022 for poor record-keeping - Lutnik seemed unconcerned about the complaints of ethics watchdogs and continued to push his agenda. A former employee said: "He only cares about himself. Trump became president for his own interests, and Howard Lutnik does business for the same purpose - they're two of a kind."
Lutnik is the son of a college professor, with a sister and a younger brother. He grew up on Long Island and showed a talent for making money from a young age. As a child, he would buy boxes of new baseball cards, then repackage them with old cards and resell them. Some would be "grand prize packs" containing five new cards; others would be "junk packs" with just one new card. Other kids enjoyed the surprise, but Lutnik's pleasure came from the certainty - he knew the repackaged cards could be sold for triple the cost of the new ones.
Life became more difficult as he entered his teenage years. Lutnik's mother passed away when he was 16, and his father died when he was 18, leaving him and his sister to care for his 15-year-old brother Gary. Howard Lutnik continued his studies at Haverford College in Pennsylvania, and his boarding school brother Gary would visit him on weekends.
He graduated in 1983 with a degree in economics, then returned to New York and joined Cantor Fitzgerald, led by the strong-willed founder Bernie Cantor, who also became his mentor. Cantor loved arbitrage, constantly moving from one deal to the next, always seeking an edge. He eventually found a niche in the multi-trillion-dollar Treasury bond market, becoming a broker. Although the work itself was not glamorous, Cantor lived a lavish lifestyle and even stayed at the White House as a guest of Bill Clinton.
Lutnik made a strong impression quickly. Within two years of graduating college, he was already trading for some of Cantor's private clients. A former senior executive told Forbes nearly 30 years ago: "Bernie won't hear a word against this kid. If you come up with evidence that Howard has stepped out of line, he'll say, 'Don't worry, he's young, let him learn.'" In 1991, the 30-year-old Lutnik took over the day-to-day management of the firm.
Controversies followed.
Lutnik brought in many friends and family members, including his brother Gary. Colleagues allege that Gary would sometimes front-run client bond orders, quickly reselling the bonds to clients at a profit. This would be illegal in the stock market, but may have been permissible, if ethically questionable, in the Treasury bond market.
In 1994, the SEC fined Cantor Fitzgerald $100,000 for improper record-keeping related to 'riskless principal' trades in Treasury auctions. Three years later, the firm agreed to pay $500,000 to settle allegations that it had assisted in fraud, though it neither admitted nor denied the findings.
Even Bernie Cantor's own family eventually clashed with Lutnik.
Around the time Lutnik became CEO, he convinced Cantor to convert the firm from a corporate to a partnership structure. In 1995, as Cantor's health declined, Lutnik teamed up with two other partners in an attempt to buy out the Cantor family's stake. The deal ultimately fell through, and in January 1996 Lutnik triggered the "incapacity committee" provision in the partnership agreement. This five-member committee voted 3-2, with Cantor's wife Iris as one of the abstainers, to strip the founding Cantor of control over the firm. Iris later sued, and while she received a large cash settlement, she lost control of the company and developed a deep distrust of Lutnik, even banning him from visiting Cantor's grave.
Lutnik turned the page and started a new chapter.
He celebrated his 35th birthday at the Metropolitan Club in New York the weekend after Cantor's death. Under his leadership, Cantor Fitzgerald expanded from its single Treasury business into bonds, derivatives, swaps, and futures. In 1996, the firm's revenues had doubled from 1991 to nearly $600 million. That year, he also launched the electronic brokerage platform eSpeed, based on his vision of the future - a move that would later help save the company in the aftermath of tragedy.
Lutnik enjoyed living life to the fullest.
In the mid-1990s, he lived in the Trump Tower, then the tallest building on the Upper East Side of Manhattan. When not at home, he could often be found in the 105th-floor offices at the World Trade Center. But unimaginable events were about to unfold - at 8:46 am on September 11, 2001, a plane struck between the 93rd and 99th floors.
Compassion helped the firm through the crisis.
After 9/11, eSpeed's market share grew, but then quickly evaporated when it introduced a new service charging bond buyers more than triple the standard fee for priority trading. Clients fled, and eSpeed eventually abandoned the practice. Lutnik continued to employ his full repertoire, optimizing and adjusting the structure of his business empire.
In 1999, Lutnik took eSpeed public, later merging it with other brokerage businesses in 2008 to form the publicly traded company BGC Partners. However, the market was skeptical of the move, discounting BGC's valuation - what one investor described as the "Howard Lutnik discount." Lutnik found a way around the problem, spinning eSpeed out of BGC in 2013 and selling it to the Nasdaq OMX Group for $750 million in cash plus stock payments over 15 years.
It proved wise to appropriately insulate Lutnik's wealth and reputation.
As Nasdaq's stock rose, the stock payments became increasingly valuable, ultimately exceeding $2 billion - more than BGC's market cap at the time. To help manage it all, Lutnik brought on a capable lieutenant, Anshu Jain, who had served as co-CEO of Deutsche Bank from 2012 to 2015. During his tenure, the German institution provided $340 million in financing to Trump.
Lutnik also actively entered the real estate sector, acquiring and consolidating several firms into Newmark, which was spun off from BGC in 2018. Newmark has grown into a multi-billion-dollar real estate services company, providing sales, lending, leasing, and property management services. One of its clients is the Trump Organization, which hired Newmark to assist in the sale of its hotel in Washington, D.C. In addition to the real estate business, Newmark also obtained a residual asset in the spin-off - the rights to BGC's Nasdaq share ownership, which pays out dividends annually, generating around $100 million in revenue.
Such transactions require a sharp mind, and even Lutnik's enemies acknowledge his intelligence. "Absolutely brilliant," said one rival. "Very, very smart," added another. "I'll just say," a third commented, "Howard works hard and usually gets what he wants, by whatever means."
It's just that not everyone is satisfied with those means.
In June 2021, it was reported that Lutnik demanded that the Compensation Committee of the Newmark Board of Directors pay him a $50 million bonus, citing his contribution to the Nasdaq transaction, which was made four years before Newmark went public. A lawsuit filed by shareholders later stated that the Committee initially decided to postpone consideration of this bonus payment. The Committee Chairman (whose husband died in the "9/11" incident) disclosed this information to Lutnik. It is alleged that Lutnik showed off his power, letting everyone know that the boss was unhappy. The Board of Directors eventually reconsidered this issue. In 2021, Lutnik received a $20 million bonus, and will receive $10 million per year for the next three years, totaling $50 million - the exact amount he had requested. The Board of Directors chaired by Lutnik stated that this lawsuit was baseless and defended the decision to award him the bonus, saying that the large bonus would motivate Lutnik to work actively. This may indeed have had such an effect in the past few years. The last bonus payment will be made at the end of 2024. This timing is perfect for Lutnik, as he is likely to leave the company about a month after receiving the bonus to join the presidential cabinet.
