Cantor Fitzgerald, the Tether-linked broker, agreed to pay the Securities and Exchange Commission (SEC) a $6.75 million penalty yesterday after it was charged with causing two special purpose acquisition companies (SPACs) that it controlled to make misleading statements to investors ahead of their initial public offerings (IPOs) that raised $750 million.
The SEC’s Division of Enforcement Acting Director, Sanjay Wadhwa, said that Cantor Fitzgerald “repeatedly” claimed it hadn’t approached merger targets in public filings despite having “substantive discussions with several private companies regarding a potential merger, including with the companies with which its SPACs eventually merged.”
The SEC press release notes that Cantor Fitzgerald neither admitted to nor denied the charges levied against it in the order and paid the civil penalty.
Read more: Why are Tether and Cantor Fitzgerald lending near identical amounts?
SPACs, otherwise known as blank-check companies, are shell corporations with no business operations that are used to merge with or acquire a private company. In this case, Cantor Fitzgerald used its two SPACs, CF Finance Acquisition Corp. II and CF Acquisition Corp. V, to raise millions before merging with View, Inc. and Satellogic Inc., respectively.
A Cantor Fitzgerald spokesperson told CNBC that, “No investor was ever harmed by the alleged issues described in the order,” and that it’s “pleased to have concluded this matter by mutual agreement with the SEC.”
Cantor Fitzgerald CEO and Chairman, Howard Lutnick, is now leading Donald Trump’s Commerce Department and was hired as co-chair for Trump’s transitional team.
A Wall Street Journal report revealed Cantor Fitzgerald acquired a 5% stake in Tether that was worth as much as $600 million. It also notes that the broker holds the majority of Tether’s $134 billion in assets in exchange for tens of millions of dollars in fees.
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