Dems press Lutnick on conflict of interest concerns in USAR deal

Democratic senators flagged conflict of interest concerns over Commerce Secretary Howard Lutnick’s involvement in a deal with his former firm Cantor Fitzgerald’s critical mining company US Rare Earth.

Sens. Elizabeth Warren of Massachusetts, Chris Van Hollen of Maryland and Ron Wyden of Oregon, the Finance Committee’s top Democrat, said in a letter obtained by CNBC that the deal raises questions about whether members of Lutnick’s immediate family benefited financially.

“It is imperative that federal investments in critical industries be made on a meritorious basis, free from conflicts of interest,” the senators wrote to Lutnick in the Feb. 25 letter, requesting more information about his involvement in the transaction.

Ministry of Commerce published a statement letter of intent last month USA will provide $1.6 billion in funding to Rare Earth to help grow the company’s planned rare earth mining and magnet manufacturing business.

The deal required USA Rare Earth to provide at least $500 million in private financing. USA Rare Earth selected Cantor as its “lead placement agent” for a fundraising round totaling $1.5 billion. financial filing.

Lutnick resigned He led the business last year as CEO and president of Cantor. His son Brandon took over as president, and his son Kyle was named vice president. Lutnick transferred his share to his Cantor sons and other adult children through trusts controlled by Brandon.

“We have serious concerns about the Department of Commerce’s decision to enter into this agreement in which your former firm, run by your sons, had a clear financial interest,” the senators said.

“Given your close ties to Cantor and Cantor’s apparent financial interest in USAR, the Department of Commerce’s investment should be closely examined,” they said.

CNBC has reached out to the Department of Commerce for comment.

The fundraising round led by Cantor was a type of transaction called private investment in public equity, or PIPE. In these transactions, a placenta agent typically sells discounted shares to a limited pool of investors for a fee, the senators wrote.

“If PIPE funds were collected under these circumstances, then it appears that USAR paid your family’s company to raise matching private funds in order to secure public funds from the government agency you lead,” the senators said.

Senators also expressed concern that financial companies run by donors to President Donald Trump’s campaigns and inaugural committees were participating in fundraising for U.S. Rare Earth. These include Blackstone CEO and co-founder Stephen Schwarzman, Citadel founder Ken Griffin and Point72 Asset Management founder Steven Cohen. financial filing.

Schwarzman donated Griffin has funded Trump’s super PAC, the president’s 2025 inauguration committee, and Cohen donated to the inauguration’s first term.

“It is unclear how and why these supporters of the Trump administration became involved in USAR PIPE or to what extent they were aware of the Commerce Department’s direct investment in USAR,” the senators said.

Citadel spokeswoman Zia Ahmed said Griffin has donated to many presidents in different administrations. “The US Rare Earth investment was not made by Ken Griffin himself, but by a fund managed by Citadel,” Ahmed said.

CNBC has reached out to Blackstone and Point72 for comment.

Among other questions, the letter requests information about when Lutnick became aware that Cantor was representing U.S. Rare Earths on the fundraising tour and whether he or Commerce had any involvement in it.