BURSTSenate Finance Committee ranking member Ron Wyden (D-Ore.) and Banking Committee ranking member Elizabeth Warren (D-Mass.) have warned Cantor Fitzgerald & Co., a finance firm linked to Commerce Secretary Howard Lutnick, that its tariff-related trades pose a potential conflict of interest.
Wyden and Warren ask in their letter to Brandon Lutnick, the CEO of Cantor Fitzgerald and son of the Commerce secretary, for details on its work on tariff refund agreements and whether anyone at the firm has communicated with President Trump, Secretary Lutnick or other Trump administration officials.
The Democrats are sounding the alarm over financial products created by Cantor Fitzgerald that would allow clients to hedge against business risks posed by the uncertainty over whether the Supreme Court will ultimately uphold Trump’s sweeping "reciprocal" tariffs against major foreign trading partners.
“Specifically, Cantor has created a ‘litigation finance’ product that places the company in the position of betting that courts will strike down Trump’s tariffs. Given that one of the purported architects of President Trump’s tariff policy is Commerce Secretary Howard Lutnick, your father and former Chairman and CEO of Cantor Fitzgerald, LP, the firm’s actions raise obvious conflict-of-interest and insider dealing concerns,” they wrote.
The Democrats raised the issue after Wired reported last month that Cantor Fitzgerald’s investment banking arm was exploring the creation of a financial product for clients to bet on the legal outcome of Trump’s tariffs.
A spokesperson for Cantor Fitzgerald said reports it has crafted financial products betting on the outcome of Trump's tariffs was "absolutely false."
“What is being reported about our business is absolutely false. Cantor is not in the business of positioning any risk, taking views or facilitating business in litigation claims involving the legality of US tariffs,” said Erica Chase, a spokesperson for the firm.
If the courts declare Trump’s tariffs, which the president says are authorized under the International Emergency Economic Powers Act, companies that paid tariffs would likely be entitled to large refunds from the U.S. government.
Cantor has reportedly offered companies an opportunity to trade their legal claim to a future tariff refund in exchange for 20 percent to 30 percent of the duties the company paid, Wyden and Warren noted.
If the courts strike down the tariffs, Wyden and Warren say, Cantor could reap a financial windfall.
“Cantor has reportedly already made a deal with at least one company for its refund rights, valued at approximately $10 million and ‘anticipate[s] that number will balloon in the coming weeks.’ A Cantor representative reportedly said the firm has, ‘the capacity to trade up to several hundred million of these presently and can likely upsize that in the future to meet potential demand,’” they wrote.
“This financial product effectively represents a bet that President Trump’s tariffs will ultimately be declared unlawful by the Supreme Court,” they argued.
Wyden and Warren are asking Brandon Lutnick to describe the scope of this activity and any contact Cantor employees have had with the Trump administration.
They want to know how many tariff refund agreements have been drafted, how many have been finalized and how many different counterparties are involved with them.
They want information on whether Cantor created the tariff refund agreements at the request of a specific client or whether the idea originated internally.
“We are concerned about the negative impacts of these tariffs and seek additional information regarding efforts by Cantor to profit from them,” they wrote.
A spokesperson for the Commerce Department did not immediately respond to a request for comment.