BGC Partners, the interdealer broker, has started legal proceedings against two former associates after discovering what it called a theft of $35.2m from funds the company set aside for UK tax payments.
The Wall Street firm, which is run by the hard-charging Howard Lutnick, first warned that the funds were missing when it released fourth-quarter results last week, but the disclosure went unreported.
The alleged theft occurred over several years through to September last year, BGC said in its earnings report, adding that it had first identified it last quarter and that it did not “involve the operations or business of the company”.
The group, which has more 5,000 employees, added that it “expects to recover most or substantially all of the stolen funds through a combination of insurance and return of assets through litigation.”
Lutnick described it as “an unfortunate event” on a subsequent earnings call with analysts, but said the loss was not material. However, the company said its financial figures for 2019 and the first three quarters of last year had been revised to reflect the loss.
BGC declined to comment further, including whether it had reported the incident to law enforcement authorities. City of London police, which handles most white-collar crime in the UK, did not respond to requests for comment on Tuesday.
The alleged theft is a blow to Lutnick, who forged his reputation and fortune in the tough world of interdealer broking in which BGC acts as a middleman between investment banks buying and selling derivatives.
Lutnick pioneered electronic trading in the US government bond market in the 1990s, but had to rebuild the company, then part of Cantor Fitzgerald, after it was devastated by the attack on the World Trade Center in 2001.
Shares in BGC, which is headquartered in New York but has a large office in London, have staged a recovery after tumbling when the pandemic first hit last year.