Howard Lutnick's Former Wall Street Firm Is Having Its Best Year Ever — WSJ
By Ben Glickman and Vicky Ge HuangCantor Fitzgerald, the former firm of Commerce Secretary Howard Lutnick, has long been an afterthought on Wall Street. Now it is having its best year ever.The investment bank and financial-services firm chugged along for years without much notice, specializing in bond trading and deals in risky corners of the finance world that competitors avoided. Now, an early bet on cryptocurrencies that is paying off and Lutnick's ascendance to the highest levels of government have Cantor in the spotlight."I've never been more bullish about the trajectory of this organization than I am now," said Sage Kelly, one of three co-chief executive officers installed after Lutnick's departure in February.Privately held Cantor is on track to book more than $2.5 billion in revenue this year, including over $1 billion in investment-banking revenue, according to people familiar with the matter. The latter figure would be nearly double its 2021 investment-banking record of $650 million. Few firms on Wall Street, if any, are likely to top their revenue in 2021, a record year for deals.So far this year, Cantor has raised more than $40 billion in capital for the crypto space and is set to hit $50 billion in financing by year-end, the people said. The firm has also doubled its head count in investment banking in the past two years, its executives said.Cantor Fitzgerald also controls two publicly traded companies: the commercial real-estate firm Newmark Group and the brokerage BGC Group.Cantor's success with crypto companies has, in part, been boosted by the election of an administration that has been perceived as friendly to the industry. President Trump has vowed to make America the "crypto capital of the world."Meanwhile, many on Wall Street are stunned to find Lutnick, whose abrasive dealmaking tactics helped make him a billionaire but turned off some of his peers, as one of Trump's premier power brokers. Lutnick has negotiated trade agreements and coaxed big investments out of business leaders.Executives at Cantor Fitzgerald see Lutnick's role in the administration — and perceived potential conflicts of interest — as a minor distraction. One executive said major clients called when markets were tanking after the "Liberation Day" tariff hikes were announced, appealing for a policy change, and he had to explain that the firm couldn't help.Bloomberg earlier reported on Cantor's financial results.Lutnick led the firm for 34 years after starting his career at the firm as a fixed-income analyst. Kelly, Pascal Bandelier and Christian Wall are now sharing CEO duties.Lutnick's two elder sons, Brandon Lutnick, 27, and Kyle Lutnick, 29, are now chairman and executive vice chairman of Cantor Fitzgerald, respectively. Their father passed his ownership of the firm to a trust benefiting his children after he took on his role in Washington.But Howard Lutnick still looms large at Cantor. A large painting of him hangs by the entryway to Cantor's Park Avenue offices. His sons still talk to their father regularly, and joke that he knows more about their personal lives than ever before, because they are prohibited from discussing the firm's business. They still try to emulate him."Every Lutnick kid, including our two younger siblings, has said to him at one point, 'We want to be the next you,'" Brandon Lutnick said in an interview at their office.Howard Lutnick climbed to the top of Cantor Fitzgerald before turning 30 under the mentorship of founder B. Gerald Cantor. A bitter legal fight with Cantor's family ended with a settlement that left Lutnick with full management control.The firm lost two-thirds of its New York workforce in the 9/11 attacks on the World Trade Center, where Cantor had an office on upper floors. Lutnick became a prominent face of the tragedy and undertook rebuilding the firm, in part by leaning on new innovations in finance. The firm still holds an annual charity day on the anniversary of the attacks.Its crypto bet is one of a number of examples of the firm's willingness to take risks. Cantor's investment bank embraced special-purpose acquisition companies, which are shell companies that take private entities public through mergers, when they boomed a few years ago and is the lead underwriter of SPAC deals this year.In years past, the firm tried and failed to launch a trading platform for predicting Hollywood box-office results. A sports-betting venture that predated widespread use of apps such as DraftKings and FanDuel eventually landed the company steep penalties for illegal-gambling and money-laundering charges.The firm's crypto focus began in 2018, when it started doing business with bitcoin miners. Clients soon expanded to include exchanges, crypto custodians and, more recently, so-called crypto-treasury companies. Cantor Fitzgerald holds much of the assets that back tether, the world's largest stablecoin, and holds a convertible bond that would entitle the firm to about 5% of the company known as Tether, The Wall Street Journal has reported.This year, a special-purpose acquisition company backed by Cantor teamed up with Tether and SoftBank to launch a publicly traded bitcoin-treasury company, in a deal valued at $3.6 billion, including debt. Cantor has also started an initiative to lend to holders of bitcoin.Cantor's recent crypto success could prove transitory, given the recent swoon in cryptocurrencies and the industry's history of booms and busts. That was on full display last week, when bitcoin plunged below $81,000 to its lowest level since April, resulting in a $1 trillion loss across the broader crypto market since early October.These days, Lutnick's sons are the face of the firm's crypto efforts. At a recent crypto conference hosted by Cantor in Miami Beach, they rubbed shoulders with the CEOs of nearly every publicly traded crypto company, hosted panels featuring leading AI investors, and made connections with regulators, including Securities and Exchange Commission Chairman Paul Atkins.Brandon Lutnick said that while crypto has been a recent sweet spot for the firm, the vision for the investment bank is much broader."The goal is to be the go-to bank in everything," he said.Write to Ben Glickman at [email protected] and Vicky Ge Huang at [email protected]