- Lofgren also argued that the deal's terms could make the company reliant on the discretion of Commerce officials, creating the potential for undue influence.
- She also pointed to a private capital raise by USA Rare Earth in which Cantor Fitzgerald was selected as the lead placement agent.
- USA Rare Earth’s $1.6 billion deal, part of the Commerce Department’s CHIPS Program, includes proposed federal funding of $277 million and a $1.3 billion senior secured loan.
House Democrat Zoe Lofgren on Friday reportedly flagged Commerce Secretary Howard Lutnick’s conflict of interest in the U.S. government’s $1.6 billion deal with USA Rare Earth Inc. (USAR).
According to a Reuters report citing a letter from Lofgren, the ranking member of the House Committee on Science, Space, and Technology, stated that the USA Rare Earth deal gives the government a “highly concerning” leverage over the company.
"This deal creates a massive personal conflict by granting the Secretary of Commerce overwhelming leverage to influence the behavior of a private company while positioning him to promote the interests of his sons as a condition of his support," Lofgren stated in the letter, according to the report.
USA Rare Earth shares were down nearly 6% in Friday’s midday trade. Retail sentiment on Stocktwits around the company trended in the ‘extremely bearish’ territory at the time of writing.
Lofgren Flags Potential Undue Influence Over USA Rare Earth
Lofgren also argued that the deal's terms could make the company reliant on the discretion of Commerce officials, creating the potential for undue influence, according to the report. She also pointed to a private capital raise by USA Rare Earth in which Cantor Fitzgerald was selected as the lead placement agent.
"The interplay between the company's vulnerability and your personal conflict is a glaring red flag," Lofgren stated, according to the report.
Lutnick stepped down as the Chairman and CEO of Cantor Fitzgerald in February 2025 after being confirmed as the Secretary of Commerce. His sons, Brandon Lutnick and Kyle Lutnick, were named Chairman and Executive Vice Chairman, respectively.
What Is The USAR Deal About?
USA Rare Earth announced in January 2026 that it had entered into a $1.6 billion deal with the Trump administration in exchange for an equity stake.
The deal, part of the Commerce Department’s CHIPS Program, includes proposed federal funding of $277 million and a $1.3 billion senior secured loan. The company said that the Commerce Department will receive 16.1 million shares of common stock and approximately 17.6 million warrants in exchange.
USA Rare Earth stated that it had also entered into a private investment in public equity (PIPE) transaction for $1.5 billion.
USAR stock is up 44% year-to-date and 43% over the past 12 months. The SPDR S&P Metals & Mining ETF (XME) is up 75% over the past 12 months, while the iShares Russell 2000 ETF (IWM) is up 19%.
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