Cantor to Pay SEC $6.75 Million for Alleged SPAC Lapses (1)

Cantor Fitzgerald LP agreed to pay $6.75 million to settle US Securities and Exchange allegations that it misled investors in two blank-check firms before their stock-market debuts.

The firm, led by Chief Executive Officer Howard Lutnick, controlled two special purpose acquisition companies in 2020 and 2021 that raised $750 million. The SPACs claimed in regulatory filings that they hadn’t had substantive talks with potential merger targets, the agency said in a statement on Thursday. In reality, the entities had already started negotiations with a small group of candidates, it said.

“This enforcement action reflects the straightforward proposition that any disclosures about substantive discussions with potential targets must be materially accurate,” Sanjay Wadhwa, acting director of the regulator’s enforcement division, said in the statement.

The firm settled without admitting to or denying the allegations. Lutnick, tapped by President-elect Donald Trump to run the Department of Commerce, isn’t a defendant in the civil case.

Read More: King of Cantor Gets a Boss of His Own in Trump

“No investor was ever harmed by the alleged issues described in the order,” Cantor said in a statement. “We are pleased to have concluded this matter by mutual agreement with the SEC.”

The Cantor-led SPACs took smart-glassmaker View Inc. and satellite company Satellogic Inc. public.

SEC Commissioner Mark Uyeda, one of the commission’s two Republicans, dissented from the enforcement action, saying the alleged misstatements and omissions were not material, nor were investors financially harmed. He said he also didn’t support the SEC’s similar settlement with Digital World Acquisition Corp., the blank-check firm that took Trump’s social media company public. The firm in 2023 agreed to pay the SEC $18 million to settle allegations about misleading statements.

SPACs are publicly listed entities armed with a war chest of cash that seek out a promising private company to take public through a merger. The arrangement helps established companies avoid the labor-intensive process of a traditional initial public offering. But as a result, investors buy in without knowing what entities they might ultimately acquire.

Once seen as the backwater of the public markets, SPACs surged in popularity in 2020 and 2021 before regulatory scrutiny and high-profile blowups soured the deals.

Cantor has embraced SPACs as a critical part of its business, both as a sponsor and as an underwriter. The company sponsored nine blank checks, six of which have successfully completed deals, while underwriting more than 100 deals going back to 2020, according to data from SPAC Research.

Since the SPAC boom went bust in 2022, Cantor Fitzgerald has remained a top player as a banker to the industry. The bank has been credited with $3.2 billion of deals, placing it ahead of bulge bracket banks such as JPMorgan Chase & Co. and Morgan Stanley, data compiled by Bloomberg show.

The View and Satellogic deals have been among the firm’s worst performers. Satellogic has lost more than half its value since going public in 2022. View, which touted windows for commercial buildings that automatically darken and lighten in response to sunlight, filed for bankruptcy protection in April.

Cantor, Lutnick and other parties involved in View’s blank-check merger agreed in August to pay $12 million to end litigation challenging the deal. Shareholders in a lawsuit filed in 2023 claimed Lutnick and others were driven by lopsided incentives to trick SPAC investors into a bad deal.

That settlement was designed to put the allegations “to rest, finally and forever, without in any way acknowledging any wrongdoing, fault, liability, or damages,” according to a joint court filing at the time.

(Updates with Uyeda statement, detail about Cantor’s SPAC deals)

--With assistance from Sally Bakewell.

To contact the reporters on this story:
Nicola M. White in Washington at nicwhite@bloomberg.net;
Bailey Lipschultz in New York at blipschultz@bloomberg.net

To contact the editors responsible for this story:
Megan Howard at mhoward70@bloomberg.net

David Scheer

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