00:00Howard Lutnick was the guy behind it, and he is now the Commerce Secretary in Washington, serving the President Trump administration.
00:08His two sons are now, I guess they've inherited the company, they've taken over the company.
00:13I'm not totally clear on what their role is within the company, but I do know the company is highly involved in a lot of the crypto deals that have taken place this year.
00:22Todd Gillespie is a Bloomberg News banking reporter, and he's been looking into this for, I want to say, weeks, months?
00:28Well, I've been covering them for, gosh, nearly two years now.
00:31Okay, a year or a second.
00:32Yeah, yeah, yeah.
00:33But yeah, we recently did an interview that came out today, Scarlett, that basically broke news on their financials this year.
00:40They're having basically their best year ever.
00:42And then they've also, obviously, this year been facing various questions about conflicts of interest.
00:47Okay, so here's my question.
00:49His sons are, I guess, running the show, but what does their position look like on the org chart of Cantor Fitzgerald, the overall business?
00:56Give us a tree.
00:57Sure, so Cantor Fitzgerald is a group that has basically three companies underneath it.
01:02One is a private investment bank called Cantor, not to be confused necessarily with Cantor Fitzgerald.
01:08And separately, it has two public companies in which it holds controlling stakes.
01:11Newmark Group, which is a property firm, property broker, and BGC Group, which is a financial broker across London and New York as well.
01:20But Cantor, which is kind of the core of the business, essentially, the most secretive, most private, kind of Howard Lutnick's, you know, realm for the past 30 years before he went into the administration.
01:33I mean, this is the hub of the group where they are investing in, you know, that they're building out teams that are dedicated to crypto.
01:41They are building out a lot of investment banking, trading, Bitcoin-related lending projects.
01:47They are really taking advantage of everything that is coming with the hype around Trump-related booms.
01:55And this part is controlled by Brandon and Kyle Lutnick.
01:58Well, Brandon and Kyle Lutnick own the entire group.
02:00They have upwards of an 80% share, I think, if not even more, of the entire group.
02:06But, yeah, Brandon is the CEO of the entire group, CEO and chairman of the entire group.
02:11Kyle, his older brother, is the executive vice chairman.
02:14Kyle's quite involved with Newmark specifically, the property group.
02:17But, yeah, Brandon is in many ways the driver of a lot of this crypto-related business.
02:22But they have three co-CEOs of the private investment bank, Sage Kelly, Pascal Vandelier, and Christian Wall.
02:29And between those three, they kind of drive a lot of the day-to-day operations.
02:33They build out the investment bank.
02:35They have been essentially Howard Lutnick's deputies for the better part of a decade before he went to D.C.
02:40And they, in many ways, are sort of the driving force behind the company still.
02:45And they're, you know, very much in partnership with the Lutnick sons.
02:49So, taking a step back, just to remind us of the relevance,
02:52how has Cantor really fit into this broader financial ecosystem?
02:56And what has that shift in power looked like?
02:58Yeah, well, I mean, that's a good question, Nora.
03:00Because, I mean, five years ago, Cantor Fitzgerald was a minnow on Wall Street.
03:04Well, some might say it's still a minnow on Wall Street, let's be clear.
03:07I mean, their revenue is about $2.5 billion.
03:09That's, you know, roughly like a third of Jefferies.
03:13You know, and it's a similar model to Jefferies.
03:15It has a trading sort of broker-dealer vibe.
03:18It's got an investment bank, M&A, but it also does brokerage.
03:21It has a big equities platform as well.
03:23But for years, it was fairly small.
03:27And Howard Lutnick took it over in the 90s from Bernie Cantor and Bernie Cantor's wife.
03:32There was a big legal spat over this.
03:34For years, it was, you know, it's been a relatively small-scale Wall Street bank.
03:39Obviously, now it's been launched into the limelight because of Lutnick's involvement with Trump.
03:43He fundraised for Trump last year.
03:45He became the chair of his transition team.
03:47So he was responsible for drawing up the list of candidates to basically go into the Trump administration, into the cabinet, and then himself ended up in the cabinet as well, which then forced this big transition to Brandon, to Kyle.
04:00And that was a transition that I think these sons expected at some point, that their father would step back.
04:05The fact that it was done for political reasons and the fact that it was done maybe quite early.
04:09Bear in mind, Brandon Lutnick is only 27.
04:11Kyle Lutnick is 29.
04:13To context, I'm 28.
04:14So when I meet these guys, I'm like, you could be, you know, you could be in my class at school.
04:20But, you know, in many ways, they've sort of, you know, they've embraced the challenge.
04:24You know, Brandon Lutnick has been standing, you know, he basically led this conference that was happening this week in Miami where I was.
04:32You know, he interviewed some big names.
04:34We had Ted Cruz there, who, by the way, is also the chair of the committee that scrutinizes Howard Lutnick's Commerce Department in the Senate.
04:40So, you know, there are all sorts of overlaps.
04:43As you would expect in the, you know, in the Trump world where business and politics probably interact more than in any other administration we've had.
04:51But, you know, fundamentally, this business is now saying, you know, they have been preparing for years for this moment, essentially, for the crypto boom, for a lot of AI and data center work that they're doing.
05:01They've been hiring bankers as well who are trying to take advantage of the regional bank mergers in the U.S.
05:07There's a lot of different aspects to this.
05:08And I think being a leaner bank, they would say, not as clunky and slow moving as some of the bigger Wall Street institutions, has allowed them to take advantage of these opportunities as well.
05:17But have they been preparing for the advent of crypto being embraced by the government, given that this happened all rather suddenly when President Trump became, you know, was inaugurated?
05:27I mean, they have, Scarlett, to be fair to them, I mean, they hired their first crypto banker in 2020.
05:33I mean, years ago, they've been Tether's main banker for, I think, even longer than that.
05:39Essentially, Howard Lutnick created that relationship, built that relationship with Tether when it was essentially a pariah.
05:46Bear in mind, Tether is a company that is now fundraising, trying to fundraise at a valuation of up to $500 billion,
05:51which would put it, you know, a joint most valuable private company in the world, incredibly profitable crypto company.
05:58But now, you know, obviously, you know, we're talking years later.
06:04The Department of Justice just last year was reported to be investigating Tether.
06:08This week, the Tether CEO stands on stage with the chair of the SEC and the chair of the CFTC embracing them, holding hands.
06:15Well, not holding hands, but smiling, I should say, next to them.
06:18And it kind of gives you a sense of how times have changed.
06:21So how have they leveraged their connections at all in Washington?
06:25Have we been seeing that playing out at all?
06:28Well, they would say that they, you know, any Washington, I mean, in their defense,
06:31they would say that any Washington interaction they would have is just the same as, you know, any other firm would have, right?
06:38I mean, Brandon Lutnick was invited to the White House to have dinner with Trump
06:41and other big Wall Street head honchos like David Solomon, Jamie Dimon.
06:45Ken Molas was there as well this week.
06:48Just I think that was Wednesday night.
06:50I actually think I saw Brandon leave the conference event in Miami to head off to the plane,
06:54not quite realizing where he was going at the time.
06:56But, you know, he's been invited and brought into this realm.
07:00Obviously, his father, Howard Lutnick, was also at this dinner.
07:03So make of that what you will.
07:06You know, there's also a case here of kind of correlation versus causation or these kinds of senses, right?
07:11Like if you are an administration that wants to embrace crypto, you know,
07:14who are the kinds of banks whose conferences you're going to speak at?
07:18Who are the, you know, who are the, you know, where are the sort of partnerships?
07:22Right.
07:23Who are the industry leaders that you're going to be consulting?
07:25You know, maybe they might be the clients of the biggest crypto bank that everybody's talking about.
07:30Which would make sense.
07:31Which would make sense.
07:32But at the same time, there are very understandable questions that are being raised over conflicts here.
07:36Yeah.
07:37And, you know, I think it's important for people to keep an eye on that.
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