SEC Charges Cantor Fitzgerald Over Misleading SPAC Disclosures

The Securities and Exchange Commission today charged global financial services firm Cantor Fitzgerald, L.P. with causing two special purpose acquisition companies (SPACs) that it controlled to make misleading statements to investors ahead of their initial public offerings (IPOs). Cantor Fitzgerald has agreed to pay a $6.75 million civil penalty to settle the SEC’s charges.

A SPAC is an entity with no underlying business operations that is formed to raise money through an IPO so it can then identify and acquire an operating business.

According to the SEC’s Order, in 2020 and 2021, a team of Cantor Fitzgerald executives managed and controlled two SPACs – CF Finance Acquisition Corp. II and CF Acquisition Corp. V – which raised $750 million from investors through IPOs ahead of the SPACs’ eventual mergers with View, Inc. and Satellogic Inc., respectively. The SEC’s order finds that Cantor Fitzgerald caused the SPACs in their SEC filings to deny having had contact or substantive discussions with potential business combination targets prior to their IPOs. However, the Order finds that at the time of each SPAC’s IPO, Cantor Fitzgerald personnel, acting on behalf of the SPACs, had already commenced negotiations with a small group of potential target companies for the SPACs, including with View and Satellogic, the companies with which the SPACs eventually merged.

“Cantor Fitzgerald misled investors about a critical investment consideration by repeatedly stating in public filings that it had not identified or approached any potential merger targets, despite having had substantive discussions with several private companies regarding a potential merger, including with the companies with which its SPACs eventually merged,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “This enforcement action reflects the straightforward proposition that any disclosures about substantive discussions with potential targets must be materially accurate." 

The order charges Cantor with causing violations of certain antifraud and proxy provisions of the federal securities laws. Without admitting or denying the order’s findings, Cantor agreed to cease and desist from violations of the charged provisions and to pay the aforementioned $6.75 million civil penalty.

The SEC’s investigation was conducted by Eugene Bull, Rebecca Schendel Norris, and Gargi Chaudhuri. It was supervised by Laura B. Josephs.