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. stage. Thousands of cryptocurrency enthusiasts gathered together, including many “royalty” from the MAGA camp, including Vivek Ramaswamy and Robert F. Kennedy Jr. and Donald Trump himself.

Lutnick, 63, a stocky man with thinning hair, gave an impassioned defense of the U.S. dollar-pegged cryptocurrency Tether in a 20-minute speech and announced the launch of a $2 billion Financing business, providing leverage support for Bitcoin investors. But before issuing these heroic words, he once again told a story that is familiar to people.

On the morning of September 11, 2001, he was sending his eldest son off to kindergarten for his first day when a plane crashed into the World Trade Center, where Cantor Fitzgerald's headquarters is located in the 101st floor. 105th floor. All 658 employees in the office were killed, including his brother Gary and best friend Doug, as well as 28 pairs of brothers and a pair of sisters. Lutnick recalled how close everyone was and said of his recruiting strategy: "We had an unusual model where we only wanted to work with people we liked." The tragedy fueled his sense of purpose. Lutnick promised to distribute 25% of the company's profits to the families of the victims over five years, eventually paying out $180 million.

Twenty-three years later, Lutnick still sees himself as a model of patriotism and perseverance. Many people think so too. On Tuesday local time, Trump announced his nomination of Lutnick as Secretary of Commerce through his social media platform Truth Social. He did not specifically mention Lutnick's business acumen or trade knowledge, but mainly reviewed the "911" incident, saying that Lutnick "is an inspiration to the world" and said that he "epitomizes facing the inevitable". Resilience in times of imagined tragedy.”

His story is true and certainly inspiring.

But Lutnick also has a less bright side. You can get some clues by looking through court documents and talking to people who have had business dealings with him. The men allege that over the years, Lutnick and his companies used various means to extract money from customers, investors and colleagues. According to one former partner, Lutnick's actions made him "the most hated man on Wall Street." His multibillion-dollar business empire, which included two publicly traded companies and a private investment bank, was riddled with self-dealing and decades of poor record-keeping, with internal feuding that continues to this day. a former memberWorker said: "What the entire company does is to deceive people and drain them dry."

Cantor Fitzgerald operates as a partnership, but the final decision-making power is undoubtedly in Lutnick's hands. With a current net worth of more than $1.5 billion, he has given himself a salary comparable to that of a king, but this has also eroded the profits of his partners.

"He could do whatever he wanted," a former partner recalled.

According to a federal court lawsuit filed last year, Lutnick asked employees to reduce their compensation. 10% to 20% of the money is converted into partner shares, which sounds good, but employees encounter twists and turns when they try to withdraw the money. The agreement allegedly gave Lutnick the unilateral authority to withhold funds from departing employees for violating non-compete clauses, which are broadly defined. It is estimated that 40% of employees fail to get back all their money after leaving their jobs. The lawsuit alleges that this was a ploy to deceive employees and enrich Lutnick. "He gave it to you when he wanted to; if he didn't want to give it, you couldn't get it," said another former colleague. Lutnick's company has filed a motion to dismiss the lawsuit.

Through a spokesman, Lutnick declined to be interviewed for this article. But some people spoke up for him, saying that some people may just not be strong enough to withstand his tough style, or not smart enough to read the partnership agreement (one executive estimated that the agreement was 700 pages long). Yet even those who support Lutnick are reluctant to express their views publicly. "People were very afraid of him," said a former colleague. "I saw it all firsthand - I saw bullying, I saw aggressive behavior."

This combative energy may be part of The traits Trump looked for when selecting his Commerce Secretary - combativeness but also loyalty - are even more important.

At the beginning of 2021, many business people were eager to draw a clear line with Trump, but Lutnick still stood by him. At that time, Trump was planning to build a media and technology company, dreaming of building a social platform similar to Twitter, but he obviously did not want to spend too much money of his own. Lutnick seemed like the perfect funder. With more than 40 years in finance, he has extensive experience taking advantage of various Wall Street trends, including the latest special purpose acquisition companies (SPACs), which inject liquidity into private companies and take them public.

Two contestants from Trump’s “Apprentice” show came on board to help him build the business. They held a Zoom meeting with Lutnick, a transcript of which was obtained by Forbes. The Trump team wrote above: "The meeting was great. Howard asked us to abandon other SPACs. He will fly in to meet with the President on March 30."

Trump and Lutnick know each other Over the years, the two have had a lot in common.

They both accumulated their initial wealth in New York in the 1980s, one in real estate and the other in Wall Street. Their businessDow is similar, jumping back and forth between different money-making schemes, sometimes attracting the attention of regulators for alleged fraud, poor record-keeping or money laundering. Both are hard-liners with a penchant for luxurious living. Lutnick lived in a Trump Palace apartment with a British butler before moving into a 10,600-square-foot townhouse with Jeffrey Epstein (Jeffrey Epstein)’s residence is only separated by a wall. (A spokesman said Lutnick "has never had any association with Epstein.")

But there is also an important difference between Trump and Lutnick.

Trump has a habit of setting aside details — during his first term, aides learned to subtract from presentations and list only the main points. Lutnick, on the other hand, is obsessed with details. His tentacles have reached almost every corner of Wall Street - stocks, bonds, swaps, futures, derivatives, cryptocurrencies and SPACs, and he has built a successful career by carefully digging out tiny profits from large-scale transactions.

That difference turned into a disagreement during discussions of Trump's media business. Trump was never the savviest when it came to scouting partners, and he ultimately secured funding from a small investor who was later charged by the Securities and Exchange Commission with committing fraud in the deal. Lutnick looked for another investment target and found Rumble, a company similar to Trump's social platform. This pro-MAGA platform is more like a YouTube copycat than Twitter.

In September 2022, Lutnick took it public through a SPAC through Cantor Fitzgerald, making a fortune with a favorable transaction structure, while inexperienced small investors suffered losses. A former Cantor partner said: "If you can't keep up with Howard's level, you can only be a piece of garbage in his path."

Lutnick is now working with Trump again , his attention to detail is once again evident.

Trump selected him to serve as co-chairman of the transition team and later nominated him as Secretary of Commerce. While the president-elect focuses on his social media accounts and headline-grabbing appointments, Lutnick is busy recruiting for lower-level positions that are actually responsible for day-to-day operations.

Cantor Fitzgerald has business dealings with various federal agencies and departments, and there are obvious conflicts of interest. However, as the Trump team picks people for agencies like the Commodity Futures Trading Commission (CFTC) - which fined Lutnick's company $6 million in 2022 for poor recordkeeping - Lutnick seems less than willing Heed the complaints from ethics watchdogs and instead press ahead with his plans. "He only cares about himself," a former employee said. "Trump is president for his own benefit, Howard Lutnick is in business forFor the same purpose, two people are only half as good as each other. "

The son of a college professor, Lutnick has an older sister and a younger brother. He grew up on Long Island and showed a talent for making money from an early age. As a child, he would buy boxes of new baseball cards. Then mix it with old cards and repackage them for sale. Some will be "jackpots," with five new cards; others will be "waste bags," with just one new card. Other kids like the surprise, but Lutnick's joy comes from certainty—he does. Know that repackaged cards can be sold for three times the cost of new cards Out.

As he entered his teenage years, life became difficult. Lutnick's mother died 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. Turnick went on to attend Haverford College in Pennsylvania, where Gary would visit him on the weekends.

He graduated in 1983 with a degree in economics, then returned to New York and joined Personal. Distinctive Founder Bernie Cantor Cantor led by Cantor Fitzgerald, Cantor also became his mentor. Cantor loved arbitrage, constantly moving from one thing to the next, always looking for an edge. He eventually found an advantage in the trillion-dollar Treasury market. Although the job itself was not glamorous, Cantor lived a luxurious life. A guest at the White House, Lutnick quickly made an impression. Two years after graduating from college, he was doing deals for some of Cantor's private clients. A former company executive told Forbes nearly 30 years ago: "Bernie couldn't hear anyone say anything bad about the kid. If you presented evidence that Howard had crossed a line, he would say, 'Don't worry, he's still young, let him learn. '" In 1991, at age 30, Lutnick took over day-to-day management of the company.

Controversy ensued.

Lutnick brought many friends and family members into the company, including Brother Gary. According to colleagues, Gary sometimes grabs customers before they place orders. Buying bonds and then quickly reselling them to customers for a profit is clearly illegal in the stock market, but may be allowed in the Treasury market, although it is ethically controversial. In 1994, the U.S. Securities and Exchange Commission Three years after Fitzgerald was fined $100,000 for improperly recording transactions related to 'risk-free investments' at a Treasury auction, the company agreed to pay $500,000 to settle a charge that it facilitated fraud. Although it did not admit or deny the findings

Not even Bernie Cantor. His family eventually fell out with Lutnick, who persuaded Cantor to convert the company from a corporation to a partnership in 1995, around the time Lutnick became CEO. As his health deteriorated, Lutnick joined forces with two other partners in an attempt to acquire the Cantor family's shares, a deal that ultimately fell through.reached, Lutnick initiated the "Incapacity Committee" specified in the partnership agreement in January 1996. The five-member committee voted to strip founder Cantor of control of the company, with three votes in favor and two abstentions. Cantor's wife, Iris, was among those who abstained and later filed suit. She received a large sum of cash but lost control of the company and developed a deep distrust of Lutnick, even banning him from visiting Cantor's grave.

Lutnik turned the page and started a new life.

He celebrated his 35th birthday at the Met Club in New York the weekend after Cantor'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 vision for the future, a move that later saved the company when tragedy struck.

Lutnik likes to enjoy life to the fullest.

In the mid-1990s, he lived in Trump Palace, then the tallest building on Manhattan's Upper East Side. When he's not at home, he can often be found in his office on the 105th floor of the World Trade Center. But the unimaginable happened - at 8:46 am on September 11, 2001, a plane crashed into the 93rd to 99th floors.

People’s compassion helped the company weather the storm.

After the "9/11" incident, the electronic platform eSpeed ​​gained market share, but then lost all of it because it launched a new service in which bond buyers paid more than three times the standard rate. You can trade first. The result was an exodus of customers, and eSpeed ​​eventually abandoned the practice. Lutnick continued to use various skills to optimize and adjust the structure of his business empire.

In 1999, Lutnick took eSpeed ​​public, 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, with one investor describing the phenomenon as a "Howard Lutnick discount." Lutnick found a way around the problem, spinning eSpeed ​​out of BGC and selling it to Nasdaq OMX Group in 2013 for $750 million in cash and stock payable over 15 years.

It turns out that keeping Lutnick's wealth and reputation appropriately insulated is a wise move.

As Nasdaq stock rose, the paid shares became more and more valuable, allowing the transaction size to eventually exceed $2 billion, which was higher than BGC’s market capitalization at the time. To help him manage all this, Lutnick hired a right-hand man, Anshu Jain, who served as Deutsche Bank’s chief executive from 2012 to 2015.co-chief executive officer. The German institution provided $340 million in financing to Trump during his time in office.

Lutnick has also actively entered the real estate field, acquiring several companies and merging them into Newmark Group (Newmark), which was spun off from BGC in 2018. Newmark grew 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 help sell its Washington, D.C., hotel. In addition to the real estate business, Newmark also obtained an ancillary asset during the spin-off - the income rights of BGC's Nasdaq shares. The shares pay out earnings in December and bring in about $100 million annually.

Such a deal requires brains, and even Lutnick's enemies admit he is smart. "Absolutely brilliant," one opponent said. "Very very clever," added another. "All I can say is," said a third, "Howard works hard and usually gets what he wants, no matter what method he uses."

But these methods do not satisfy everyone.

In June 2021, Lutnick allegedly asked the compensation committee of Newmark's board of directors to pay him a $50 million bonus for his contribution to the Nasdaq transaction, which was It was agreed four years before the Newmark listing. A later lawsuit filed by shareholders said the committee initially decided to delay consideration of the bonus. The chairman of the committee, whose husband was killed on 9/11, broke the news to Lutnick. Lutnick allegedly showed off his prowess to let everyone know that his boss was unhappy. Eventually the board reconsidered the issue. Lutnick received a $20 million bonus in 2021 and $10 million in each of the next three years, for a total of $50 million — exactly the amount he requested.

The board, chaired by Lutnick, said the lawsuit was baseless and defended the decision to give him a bonus, saying large bonuses would motivate Lutnick to work actively. This may indeed have had that effect within a few years. The last bonus will be paid at the end of 2024. The timing is perfect for Lutnick, who is likely to leave the company about a month after receiving his bonus to take a position in the presidential cabinet.