Cantor Fitzgerald was sued by a pension fund investor in its BGC Partners unit over debt and stock offerings that it claims enriched Cantor CEO Howard Lutnick at the expense of shareholders.
The $2.58 billion International Painters and Allied Trades Industry Pension Fund, Hanover, Md., said the company made a $150 million debt transaction at an “unfair interest rate” that diluted the shareholders' stock, according to a complaint filed Monday in New York State Supreme Court.
BGC, then known as eSpeed, was spun off as a public company by Cantor Fitzgerald in 1999. After a merger in 2008, the electronic brokerage company became BGC Partners. The $150 million debt deal was made at the time of the merger at a 5.19% interest rate. That debt was later replaced by notes at an 8.79% rate that could be converted into stock, thus diluting the shares, according to the complaint.
Cantor owns 56% of BGC Partners' Class A stock and 100% of its Class B shares, according to the suit.
The complaint also names Cantor directors Stephen Curwood, John Dalton, Barry Sloane and Albert Weis as defendants.
Cantor Fitzgerald spokeswoman Sandra Lee said the firm had no comment.
Reporter Hazel Bradford contributed to this story.