Congressional Democrats are escalating their investigation into a potential conflict-of-interest scheme involving Commerce Secretary Howard Lutnick and a government investment in rare earth company USA Rare Earth, reports the Wall Street Journal.
According to the report, after Lutnick stonewalled questions about the deal, lawmakers changed tactics and trained their sights on his son, Brandon Lutnick, who chairs Cantor Fitzgerald — the firm that served as lead placement agent on USA Rare Earth's private share offering connected to the government's investment.
Cantor Fitzgerald, which Howard Lutnick led for more than 30 years before handing ownership to his children, had previously worked with USA Rare Earth, the report noted. When the federal government announced plans to invest up to $1.6 billion in loans and incentives in the company, Cantor Fitzgerald somehow ended up as the lead placement agent — putting the Wall Street firm in a position to profit greatly via fees.
In a letter signed by Sens. Elizabeth Warren, Ron Wyden, and Chris Van Hollen, along with Rep. Zoe Lofgren, Democrats demanded the paper trail showing how Cantor Fitzgerald was selected and what fees the firm collects, as well as what meetings occurred between Cantor executives and Commerce Department officials.
According to the WSJ exclusive, "Commerce Secretary Lutnick has already refused to provide answers" to similar inquiries sent earlier this year, according to the lawmakers. Now lawmakers are going after his son's firm directly.
USA Rare Earth CEO Barbara Humpton is also receiving renewed scrutiny, the Journal reported. In past comments, she acknowledged that Lutnick helped USA Rare Earth, a detail that suggested the Commerce Secretary's involvement in steering the company toward federal investment may have been more than casual.
In January, the government agreed to supply up to $1.6 billion in loans and federal incentives to USA Rare Earth in exchange for significant ownership. The company simultaneously raised $1.5 billion in private investment, with Cantor Fitzgerald taking its cut as the placement agent, the report notes.
