Investments

12 Months Ended

Dec. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Investments Carried Under the Measurement Alternative


(in thousands)	Percent Ownership1	December 31, 2022		December 31, 2021
Advanced Markets Holdings	25%	$	5,090	$	5,110
China Credit BGC Money Broking Company Limited	33%	21,104		16,784
Freedom International Brokerage	45%	9,659		9,794
Other		2,530		1,159
Equity method investments		$	38,383	$	32,847
Investments carried under measurement alternative		192		192
Total equity method and investments carried under measurement alternative		$	38,575	$	33,039

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1Represents the Company’s voting interest in the equity method investment as of December 31, 2022 and 2021.

The carrying value of the Company’s equity method investments was $38.4 million and $32.8 million as of December 31, 2022 and 2021, respectively, and is included in “Investments” in the Company’s Consolidated Statements of Financial Condition.

The Company recognized gains of $10.9 million, $6.7 million and $5.0 million related to its equity method investments for the years ended December 31, 2022, 2021 and 2020, respectively. The Company’s share of the net gains or losses is reflected in “Gains (losses) on equity method investments” in the Company’s Consolidated Statements of Operations.

For the years ended December 31, 2022 and 2021, the Company did not recognize impairment charges of existing equity method investments, however, wrote off a portion of a subordinated loan to an equity method investee in the current year (see "Investments in VIEs" within this note for more information). For the year ended December 31, 2020, the Company recorded impairment charges of $3.9 million relating to existing equity method investments. The impairment was recorded in “Other income (loss)” in the Company’s Consolidated Statements of Operations. During the year ended December 31, 2022, the Company did not sell any equity method investments. The Company sold part of an equity method investment with a fair value of $3.8 million during the year ended December 31, 2021. During the year ended December 31, 2020, the Company did not sell any equity method investments.

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


	Year Ended December 31,
	2022		2021		2020
Statements of operations:
Total revenues	$	125,405	$	108,458	$	94,744
Total expenses	88,050		82,581		71,241
Income before income taxes	$	37,355	$	25,877	$	23,503


	December 31,
	2022		2021
Statements of financial condition:
Cash and cash equivalents	$	82,725	$	104,855
Fixed assets, net	1,848		2,603
Other assets	54,744		42,640
Total assets	$	139,317	$	150,098
Payables to related parties	—		2,000
Other liabilities	78,740		92,114
Total partners’ capital	60,577		55,984
Total liabilities and partners’ capital	$	139,317	$	150,098

See Note 13—“Related Party Transactions” for information regarding related party transactions with unconsolidated entities included in the Company’s Consolidated Financial Statements.

Investments Carried Under Measurement Alternative

The Company has acquired equity investments for which it did not have the ability to exert significant influence over operating and financial policies of the investees. These investments are accounted for using the measurement alternative in accordance with the guidance on recognition and measurement.

The carrying value of these investments as of December 31, 2022 and 2021was $0.2 million, respectively, and they are included in “Investments” in the Company’s Consolidated Statements of Financial Condition. The Company did not recognize any gains, losses, or impairments relating to investments carried under the measurement alternative for the years ended December 31, 2022, 2021 and 2020.

In addition, as of December 31, 2022 and 2021, the Company owns membership shares, which are included in “Other assets” in the Company’s Consolidated Statements of Financial Condition. These equity investments are accounted for using the measurement alternative in accordance with the guidance on recognition and measurement. The Company recognized $1.8 million of unrealized gains, $0.1 million of unrealized losses, and $0.4 million of unrealized gains to reflect observable transactions for these shares during the years ended December 31, 2022, 2021, and 2020, respectively.

Investments in VIEs

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, 2022				December 31, 2021
	Investment		Maximum Exposure to Loss		Investment		Maximum Exposure to Loss
Variable interest entities1	$	2,530	$	2,959	$	1,159	$	2,139

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1The Company has entered into a subordinated loan agreement with Aqua, whereby the Company agreed to lend the principal sum of $980 thousand. The Company’s maximum exposure to loss with respect to its unconsolidated VIEs includes the sum of its equity investments in its unconsolidated VIEs and the $430 thousand and $980 thousand subordinated loan to Aqua as of December 31, 2022 and 2021, respectively. The Company did not recognize any interest income on the subordinated loan subsequent to being designated as a non-accrual loan in November 2022. As of December 31, 2022, the Company wrote off $550 thousand of the subordinated loan, which was recorded as part of "Other expenses" on the Company's Consolidated Statements of Operations.

Consolidated VIE

The Company 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 $9.2 million and $6.8 million as of December 31, 2022 and 2021, 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 $1.4 million and $1.3 million as of December 31, 2022 and 2021, respectively. The Company’s exposure to economic loss on this VIE was $5.5 million and $4.5 million as of December 31, 2022 and 2021, respectively.