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Opinion

Sideways: Cantor Fitzgerald signs on for Obamacare

The news that former president Barack Obama has agreed to speak at a Cantor Fitzgerald healthcare conference for a fee of $400,000 raises two important questions.

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Hiring Obama to give a speech has raised the profile of Cantor Fitzgerald

Why is Obama taking money from the Wall Street fat cats he once condemned? And who knew Cantor Fitzgerald had a healthcare investment banking practice?

The second question is slightly unfair. Cantor has been reshaping itself as a mid-tier investment bank since the interdealer brokerage for which it was best known was split off in the form of BCG Partners in 2004. 

Howard Lutnick, who became CEO of Cantor in 1991 and turned it into the top broker of US treasuries, is also chairman and CEO of BCG Partners, but Cantor Fitzgerald is run separately as an investment bank with a focus on equity and debt capital markets and middle market clients.

Cantor does not rank in the top 50 for investment banking fees in either the US or Europe, but two high-profile hires since last year demonstrate Lutnick’s ambitions. The first was the appointment of Sage Kelly as head of global investment banking; the second was the more recent move to hire former Deutsche Bank co-CEO Anshu Jain as president.

Kelly is best known for one of the most lurid divorce cases ever to bring unwelcome publicity to Wall Street. He was head of the healthcare investment banking practice at Jefferies when in 2014 his wife filed divorce papers with allegations of drug-filled parties in the Hamptons and a four-way sexual encounter with a client and his wife.

The New York tabloids duly delivered ‘Wolf of Wall Street’ headlines and kept the case in the spotlight until Kelly resigned from Jefferies and reached a private divorce settlement with his wife.

After taking a year out of the markets, Kelly joined Cantor Fitzgerald last March and has since been hiring staff across regions.

Puzzled

The arrival of Anshu Jain as president of Cantor at the start of this year puzzled many former colleagues. Like Kelly, he had been out of the markets for just over a year, after being forced out as co-CEO of Deutsche Bank in June 2015.

Some of Jain’s closest associates from the days when his global markets group was the revenue engine at Deutsche Bank have found roles at the intersection of sovereign wealth financing and technology investment.

Rajeev Misra, former head of credit at Deutsche Bank, runs the SoftBank Vision Fund that aims to invest $100 billion in technology ventures. Michele Faissola, former head of rates and later asset management at Deutsche, has set up a partnership with two other Deutsche veterans that is doing deals with the Qatari royal family and was involved with the Saudi Arabian investment of up to $45 billion in the SoftBank fund that Misra is running.

Their former boss Jain seems left out from this excitement in his new role at a mid-tier firm that is a fraction of the size of the bank he once ran.

Still, hiring Obama to give a speech has raised the profile of Cantor Fitzgerald. Cantor declined to comment on which executive made the decision to pay Obama $400,000 to speak. Kelly is a healthcare specialist, so will presumably take the lead in hosting the conference, which has been held in the last two years at Le Parker Meridien hotel in mid-town New York.

Jain has a history of paying up for well-known conference guests, however, so it might have been his call. He famously booked the Rolling Stones to play at a Deutsche Bank derivatives conference in Barcelona in 2007 for over €4 million. 

Getting Obama for $400,000 looks like a relative bargain. There may also be room for savings at the venue. Le Parker Meridien is known for the speakeasy-style burger joint it has hidden behind a curtain in its lobby, so if healthcare conference attendees are willing to submit to burgers and fries, the eventual catering bill could be minimal. 

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