U.S. Senator Elizabeth Warren (D-MA) speaks as U.S. Trade Representative Jamieson Greer testifies before a Senate Finance Committee hearing on U.S. President Donald Trump’s trade policy, on Capitol Hill in Washington, D.C., U.S., April 8, 2025.
Kevin Mohatt | Reuters
Democratic senators flagged conflict of interest concerns over the involvement of Commerce Secretary Howard Lutnick’s former firm, Cantor Fitzgerald, in a deal with critical minerals startup USA Rare Earth.
Sens. Elizabeth Warren of Massachusetts, Chris Van Hollen of Maryland, and Ron Wyden of Oregon, the top Democrat on the Finance Committee, said in a letter obtained by CNBC that the deal raises questions about whether Lutnick’s immediate family members may have benefited financially.
“It is imperative that federal investments in critical industries be made free from conflicts of interest and on the merits,” the senators told Lutnick in the letter dated Feb. 25, requesting more information about his involvement in the transaction.
The Commerce Department issued a letter of intent last month to provide USA Rare Earth with $1.6 billion in funding to help scale up the company’s planned rare earth mining and magnet manufacturing business.
The deal required USA Rare Earth to secure at least $500 million in private funding. USA Rare Earth selected Cantor as the “lead placement agent” for a fundraising round that totaled $1.5 billion, according to a financial filing.
Lutnick stepped down last year as chairman and CEO of Cantor to lead Commerce. His son Brandon took the reins as chairman and his son Kyle was named executive vice chairman. Lutnick transferred his stake in Cantor to his sons and other adult children through trusts controlled by Brandon.
“We have serious concerns about the Commerce Department’s decision to enter this deal in which your former firm, run by your sons, has a clear financial interest,” the senators said.
“Given your close ties to Cantor, and Cantor’s apparent financial interest in USAR, the Commerce Department’s investment should be closely scrutinized,” they said.
CNBC has reached out to the Commerce Department for comment.
The Cantor-led fundraising round was a type of transaction called private investment in public equity, or PIPE. In these transactions, a placement agent usually sells discounted shares to a restricted pool of investors while receiving a fee, the senators wrote.
“If the PIPE funds were raised under these circumstances, then it appears that, in order to secure public funds from the government agency you lead, USAR paid your family’s company to raise matching private funds,” the senators said.
The senators also raised concerns that financial firms led by donors to President Donald Trump’s campaigns and inaugural committees participated in the fundraising for USA Rare Earth. They include Blackstone co-founder and CEO Stephen Schwarzman, Citadel founder Ken Griffin, and Point72 Asset Management founder Steven Cohen, according to a financial filing.
Schwarzman donated to Trump’s super PAC, Griffin gave funds to the president’s 2025 inaugural committee and Cohen donated to his first-term inauguration.
“It is unclear how or why these supporters of the Trump administration became involved in the USAR PIPE, or the extent to which they were aware of the Commerce Department’s direct investment in USAR,” the senators said.
Griffin has made donations to multiple presidents across administrations, Citadel spokesperson Zia Ahmed said. “The USA Rare Earth investment was made by a Citadel-managed fund, not by Ken Griffin personally,” Ahmed said.
CNBC has reached out to Blackstone and Point72 for comment.
The letter requests information on when Lutnick became aware of Cantor’s representation of USA Rare Earth in the fundraising round and whether he or Commerce had any involvement in it, among other questions.
