Equity Method Investments and Investments Carried Under the Measurement Alternative

(in thousands)	Percent Ownership¹			December 31, 2019		December 31, 2018
Advanced Markets Holdings		43	%	$	10,259	$	10,910
China Credit BGC Money Broking Company Limited		33	%		12,214		10,435
Freedom International Brokerage		45	%		10,142		9,959
Other					7,385		3,907
Equity method investments				$	40,000	$	35,211
Investments carried under measurement alternative					349		192
Total equity method and investments carried under measurement alternative				$	40,349	$	35,403

The carrying value of the Company’s equity method investments was $40.0 million and $35.2 million as of December 31, 2019 and 2018, respectively, and is included in “Investments” in the Company’s consolidated statements of financial condition.

The Company recognized gains of $4.1 million, $7.4 million and $4.6 million related to its equity method investments for the years ended December 31, 2019, 2018 and 2017, respectively. The Company’s share of the net gains and losses is reflected in “Gains (losses) on equity method investments” in the Company’s consolidated statements of operations.

Summarized financial information for the Company’s equity method investments is as follows (in thousands):

	Year Ended December 31,
	2019		2018		2017
Statements of operations:
Total revenues	$	77,211	$	85,619	$	87,790
Total expenses		61,680		72,906		73,327
Net income	$	15,531	$	12,713	$	14,463

	December 31,
	2019		2018
Statements of financial condition:
Cash and cash equivalents	$	64,614	$	74,069
Fixed assets, net		3,120		3,420
Other assets		22,782		24,530
Total assets	$	90,516	$	102,019
Payables to related parties		2,000		2,000
Other liabilities		46,287		60,858
Total partners’ capital		42,229		39,161
Total liabilities and partners’ capital	$	90,516	$	102,019

See Note 14—“Related Party Transactions” for information regarding related party transactions with unconsolidated entities included in the Company’s consolidated financial statements.

The Company had previously acquired equity investments for which it did not have the ability to exert significant influence over operating and financial policies of the investees. Prior to January 1, 2018, these investments were accounted for using the cost method in accordance with U.S. GAAP guidance, Investments—Other. The Company did not recognize any gains or losses relating to cost method investments for the year ended December 31, 2017.

Effective January 1, 2018, these investments are accounted for using the measurement alternative in accordance with the new guidance on recognition and measurement. The carrying value of these investments was $0.4 million and $0.2 million as of December 31, 2019 and 2018, respectively, and they are included in “Investments” in the Company’s consolidated statements of financial condition.

In addition, the Company owns membership shares, which are included in “Other Assets” in the Company’s consolidated statements of financial condition as of December 31, 2019 and 2018. Prior to January 1, 2018, the equity investments in this line item were accounted for using the cost method in accordance with U.S. GAAP guidance, Investments—Other. Effective January 1, 2018, these equity investments are accounted for using the measurement alternative in accordance with the new guidance on recognition and measurement. The Company recognized unrealized gains of $22.8 million and $38.0 million to reflect observable transactions for these investments during the years ended December 31, 2019 and 2018, respectively. The Company did not recognize any losses or impairments relating to investments carried under the measurement alternative for the years ended December 31, 2019 and 2018, respectively.

Certain of the Company’s equity method investments included in the tables above are considered VIEs, as defined under the accounting guidance for consolidation. The Company is not considered the primary beneficiary of and therefore does not consolidate these VIEs. The Company’s involvement with such entities is in the form of direct equity interests and related agreements. The Company’s maximum exposure to loss with respect to the VIEs is its investment in such entities as well as a credit facility and a subordinated loan.

The following table sets forth the Company’s investment in its unconsolidated VIEs and the maximum exposure to loss with respect to such entities (in thousands).

December 31, 2019

December 31, 2018

Investment

Maximum

Exposure to Loss

Investment

Maximum

Exposure to Loss

Variable interest entities¹

4,699

5,679

3,899

4,879

The Company is invested in a limited liability company that is focused on developing a proprietary trading technology. The limited liability company is a VIE, and it was determined that the Company is the primary beneficiary of this VIE because the Company was the provider of the majority of this VIE’s start-up capital and has the power to direct the activities of this VIE that most significantly impact its economic performance, primarily through its voting percentage and consent rights on the activities that would most significantly influence the entity. The consolidated VIE had total assets of $7.4 million and $4.9 million as of December 31, 2019 and 2018, respectively, which primarily consisted of clearing margin. There were no material restrictions on the consolidated VIE’s assets. The consolidated VIE had total liabilities of $2.1 million and $0.6 million as of December 31, 2019 and 2018, respectively. The Company’s exposure to economic loss on this VIE was $2.8 million and $2.1 million as of December 31, 2019 and 2018, respectively.