Cantor Fitzgerald will pay a $6.75M fine to the Securities and Exchange Commission to settle charges that it caused two special-purpose acquisition companies it controlled “to make misleading statements to investors ahead of their initial public offerings,” the SEC announced Thursday.
Howard Lutnick, President-elect Donald Trump's nominee for secretary of commerce, is chairman and CEO of Cantor Fitzgerald.
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The two SPACs, CF Finance Acquisition Corp. II and CF Acquisition Corp. V, raised $750M from investors through IPOs prior to mergers with smart-glass maker View and geospatial company Satellogic, the SEC said in a release. View announced plans to go private and file for bankruptcy earlier this year after Cantor applied pressure to the struggling company.
“Cantor Fitzgerald misled investors about a critical investment consideration by repeatedly stating in public filings that it had not identified or approached any potential merger targets, despite having had substantive discussions with several private companies regarding a potential merger, including with the companies with which its SPACs eventually merged,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement, in a statement.
“This enforcement action reflects the straightforward proposition that any disclosures about substantive discussions with potential targets must be materially accurate,” Wadhwa said.
Cantor submitted a settlement offer to the SEC that neither admitted nor denied the commission's charges, and the SEC accepted.
At the center of the charges are “materially false and misleading statements” made by the SPACs, according to the SEC order.
In both cases, the SPACs said in announcements of intended mergers that no one working for the SPACs or acting on their behalf had engaged in serious discussions with the companies targeted for mergers. But, according to the SEC, discussions had begun months before the announcements and continued during the pre-IPO period.
Statements filed with the SEC by the Cantor-controlled SPACs did not accurately reflect the relationships between the SPACs and the companies they intended to merge with, violating antifraud provisions of securities laws, the SEC charged.
Cantor acted through a team of company executives and employees of company subsidiaries, the SEC said. The team controlled the SPACs, and its actions included “conducting a centralized search for potential business combination targets, and engaging in substantive discussions with potential targets,” the SEC said.
In addition to leading Cantor, Lutnick is also the CEO and chairman of BGC Group, a financial technology firm, and an executive chairman at Newmark. Lutnick announced plans to step down from all three roles if confirmed to a position in Trump's cabinet.
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