Bloomberg News

Cantor Fitzgerald Sued by Pension Fund Shareholder Over BGC Unit Debt Deal

March 09, 2012

Cantor Fitzgerald LP was sued by a pension fund investor in its BGC Partners unit over debt and stock offerings that it claims enriched Cantor’s Chief Executive Officer Howard Lutnick at the expense of shareholders.

International Painters and Allied Trades Industry Pension Fund said that the company made a $150 million debt transaction at an “unfair interest rate” that diluted the shareholders’ stock, according to a complaint filed today in New York State Supreme Court.

BGCP (BGCP), then known as eSpeed Inc., was spun off as a public company by Cantor in 1999. After a merger in 2008, the company became BGC partners. The $150 million debt deal was made at the time of the merger at a 5.19 percent interest rate. That debt was later replaced by notes at an 8.79 percent rate that could be converted into stock, thus diluting the shares, according to the complaint.

Cantor owns 56 percent of BGC Partners’ Class A stock and 100 percent of its Class B shares, according to the suit. BGCP is an electronic brokerage company based in New York.

The complaint also names Cantor directors Stephen Curwood, John Dalton, Barry Sloane and Albert Weis as defendants.

Sandra Lee, a spokeswoman for New York-based Cantor, didn’t immediately reply to messages seeking comment on the suit.

The case is International Painters and Allied Trades Industry Pension Fund v. Cantor Fitzgerald LP, 650736-2012, Supreme Court of the State of New York.

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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