Ranking Member Lofgren Raises Alarm Over Terms of Commerce Department Equity Stake in USA Rare Earth, Condemns Lutnick Conflict of Interest

WASHINGTON, D.C.– Yesterday, Ranking Member Zoe Lofgren (D-CA) sent a letter to Department of Commerce (DOC) Secretary Howard Lutnick condemning the Department’s proposed equity stake deal with USA Rare Earth, Inc. (USAR). The terms of the agreement raise serious concerns about the influence DOC will wield over USAR under the deal. These concerns are amplified by the involvement of Cantor Fitzgerald, a financial services firm controlled by Secretary Lutnick’s sons, in a parallel transaction that saw USAR raise private capital at the behest of DOC as a condition of the government’s investment.  

“While DOC has revealed few details about the agreement, what has been publicly disclosed – primarily by the company – is highly concerning and raises alarm bells,” Ranking Member Lofgren wrote in the letter. “The negotiated terms of the deal include conditions that are deeply strange in the context of a government equity stake. Most notably, in its risk factor disclosures to the Securities and Exchange Commission, USAR disclosed that DOC will keep its full equity stake in the company even if the government subsequently backs out of the deal and withdraws its entire investment. Simultaneously, the company disclosed that one of DOC’s conditions to finalize the agreement was the execution of a private placement to raise private capital, which the company separately revealed would be led by Cantor Fitzgerald, the financial services firm formerly controlled by you and now controlled by your sons.”

“Secretary Lutnick, this USAR agreement creates conflicts of interest, blurs the line between your official responsibilities and your family interests, and appears to grant the federal government an extraordinary and even bizarre degree of leverage with which it can wield influence over a private company,” Ranking Member Lofgren continued. “How can such a lopsided power imbalance between government and private sector possibly be justified, wherein a company lies at the mercy of the Secretary of Commerce while simultaneously doing business with his sons? It cannot. DOC must explain itself immediately, and it must not finalize its investment in USA Rare Earth until it does.”

Read the letter here. 

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