Some executives at Cantor Fitzgerald are steaming mad at their boss, chief executive Howard Lutnick for quietly pocketing a chunk of a $135 million settlement the company received from American Airlines (AAL) over negligence related to the 9-11 terrorist attacks that killed more than 600 of the brokerage firm’s employees, the FOX Business Network has learned.
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Cantor accused the airline of failing to prevent hijackers from taking the plane that crashed into the firm’s headquarters in the north tower of the World Trade Center. After years of legal wrangling, American agreed to $135 million settlement in December 2013.
Some people inside Cantor believed the money would be distributed to families of company employees who died in the attacks, or put into the firm’s general coffers. But during a conference call in March, Lutnick told senior executives “the bulk” of the money would be distributed among the firm’s partners, according to one person on the call. Further, the person said each partner would receive $2 for each partnership unit.
The source also said Lutnick is widely believed to own the biggest piece of the firm’s partnership shares, thus entitling him to possibly tens of millions of dollars from the settlement.
“I have no idea how much he made from this but he is the biggest partner,” the source said.
Speculation in the firm suggests Lutnick took anywhere from $15 million to $25 million from the settlement. A spokeswoman for Cantor would not deny he was entitled to receive millions of dollars, and neither she nor Lutnick would deny the speculated amount.
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"All of the money for the business interruption recovery relating to the American Airlines case went either to strengthen and support the overall business, or to the over 600 Cantor Partners, precisely proportionate with the exact stake in the company, Mr. Lutnick included,” the spokeswoman said. “For five years, Cantor’s Partners provided 25% of the firm’s profits to the 9/11 families, a total of at least $180 million, in addition to ten years of health benefits."
Lutnick declined to comment.
A senior executive at Cantor said the manner in which the settlement was distributed, including the chunk of money Lutnick received, is entirely appropriate since Cantor never promised family victims a portion of the money in the first place. The executive described the case against American Airlines as a “business interruption lawsuit” since Cantor’s offices were destroyed in the attack, meaning it was appropriate for the company to keep the money.
Cantor, this person said, has donated millions of dollars to charities to support the victims of 9-11, and the families of its own employees.
But the move is controversial inside the firm, and might pose a problem for the chief executive, one of the more outspoken executives on Wall Street, who is eyeing a political career. As reported by FOX Business, Lutnick recently told people he might make a run for New York City mayor.
Cantor’s opaque partnership structure makes it difficult to determine how much Lutnick could receive from the settlement. Lutnick is also chief executive of BGC Partners(BCGP), a publicly traded brokerage firm, and he runs other businesses related to Cantor.