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Billionaire businessman Howard Lutnick will face a senate hearing on Wednesday for his nomination to be Donald Trump’s secretary of commerce, as questions swirl over whether his pledge to unwind his significant holdings will be enough to avoid numerous conflicts of interest.
If confirmed, the chief executive of Wall Street brokerage firm Cantor Fitzgerald and major Trump donor will be the president’s emissary to the business community he once helped lead — and will oversee a department with sway over many of his prior interests, including cryptocurrencies, the commercial satellite sector and the microchip industry.
Trump nominated Lutnick to “lead our tariff and trade agenda”, although the commerce department typically focuses on priorities such as patents and economic data, the national weather service, the census and, recently, chip manufacturing.
“We plan to end the decades of policies that threw American workers to the wolves,” Lutnick said in a speech during Trump’s inauguration festivities.
In a letter to ethics officials, Lutnick said he would resign from his brokerage firm and divest his holdings in a host of companies — including BGC Group, which has a joint-venture with a Chinese company — if confirmed as commerce secretary.
But while he pledged that his wife and young children would not purchase the divested assets, he did not give a similar assurance about his adult children, two of whom work for Cantor companies. Without this, Lutnick’s divestments mean “very little in practical terms”, said Tony Carrk, the executive director of the advocacy group Accountable.us.
Carrk said: “It’s what Lutnick didn’t say that speaks volumes . . . from what we see, Lutnick’s conflicts of interest will continue to loom over the department, and that could cost everyday consumers.”
Cantor declined to comment.
One of Cantor’s largest holdings — it recently reported a $1.2bn stake — is in AI chipmaker Nvidia. Under former president Joe Biden, the commerce department was delegated to investigate how Nvidia chips ended up in China, despite a US ban on advanced semiconductor exports.
A vocal cheerleader for crypto, Lutnick has a strong interest in the stablecoin Tether, in which Cantor has a stake of an undisclosed size. The financial services firm also manages a significant portion of Tether’s reserves, now primarily held in US Treasury bills.
Within the commerce department sits the Office of Space Commerce, which has jurisdiction over radio spectra used by satellites and exports of aerospace products, among other matters. Cantor is invested in Uruguay-based earth observation company Satellogic, which has a long-standing commercial partnership with fellow billionaire Elon Musk’s SpaceX, and has established a US presence in an attempt to win lucrative government contracts in its own right.
Lutnick resigned from Satellogic’s board in November, following Trump’s win.
Last month, Cantor agreed to pay a $6.75mn penalty to settle charges from the US Securities and Exchange Commission for allegedly making misleading statements to investors in the lead up to two public offerings that raised $750mn. The company has also had multiple run-ins with other federal regulatory bodies, including the Financial Industry Regulatory Authority.
Although Lutnick plans to resign as Cantor’s chief executive and sell his stake within 90 days of being confirmed, some of his family will remain embedded in the firm.
The entrepreneur’s son Brandon, who previously worked for Tether, took the helm of Cantor’s newest blank-cheque company last month, according to regulatory filings. The special purpose acquisition company plans to raise $200mn and merge with a private enterprise.
Lutnick is expected to be confirmed by the Republican-controlled Senate.
Ted Cruz, who chairs the committee that will question Lutnick, said he was “an excellent choice” to lead the commerce department, and that “his vast experience will serve him well in his mission to promote America’s unlimited entrepreneurial spirit”.
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