Marketable Securities

9 Months Ended

Sep. 30, 2019

Investments All Other Investments [Abstract]

Marketable Securities

(7) Marketable Securities

On June 28, 2013, BGC sold certain assets of eSpeed, its on-the-run business, to Nasdaq. The total consideration received by BGC in the transaction included an earn-out of up to 14,883,705 shares of Nasdaq common stock to be paid ratably over 15 years, provided that Nasdaq, as a whole, produces at least $25.0 million in consolidated gross revenues each year (the “Nasdaq Earn-out”). The Nasdaq Earn-out was excluded from the initial gain on the divestiture and is recognized in income as it is realized and earned when these contingent events have occurred, consistent with the accounting guidance for gain contingencies. The remaining rights under the Nasdaq Earn-out were transferred to Newmark on September 28, 2017. Any Nasdaq shares that were received by BGC prior to September 28, 2017 were not transferred to Newmark.

In connection with the Nasdaq Earn-out, Newmark received 992,247 shares during the year ended December 31, 2018. Newmark will recognize the remaining Nasdaq Earn-out of up to 7,937,976 shares of Nasdaq common stock ratably over approximately the next 8 years, provided that Nasdaq, as a whole, produces at least $25.0 million in gross revenues each year. During the three months ended September 30, 2019 and 2018, in connection with the Nasdaq Earn-out, Newmark recognized a gain of $98.6 million and $85.1 million, respectively, which is included in “Other income” in the accompanying unaudited condensed consolidated balance sheet. For further information, refer

to the section titled “Exchangeable Preferred Partnership Units and Forward Contract” in Note 1 — Organization and Basis of Presentation, See Note 11 — “Derivatives” and See Note 26 — “Fair Value of Financial Assets and Liabilities”.

Newmark sold 350,000 and 650,000 of the Nasdaq shares during the nine months ended September 30, 2019 and September 30, 2018, respectively. As of September 30, 2019, Newmark had 250,000 Nasdaq shares remaining in connection with the Nasdaq Earn-out. During the nine months ended September 30, 2019 and 2018, the gross proceeds from the Nasdaq shares sold was $32.6 million and $51.4 million, respectively. Newmark recognized a gain on the sale of these securities of $2.2 million and $0.0 million for the three months ended September 30, 2019 and 2018, respectively, and $4.1 million and $1.5 million for the nine months ended September 30, 2019 and 2018, respectively. Newmark also recorded unrealized gain/(loss) on the mark-to-market of these securities of $(0.7) million and $(0.6) million for the three months ended September 30, 2019 and 2018, respectively, and $4.4 million and $0.9 million for the nine months ended September 30, 2019 and 2018, respectively. Realized and unrealized gains on the mark-to-market of these securities are included in “Other income, net” on the accompanying unaudited condensed consolidated statements of operations. As of September 30, 2019 and December 31, 2018, Newmark had $123.4 million and $48.9 million, respectively, included in “Marketable securities” on the accompanying unaudited condensed consolidated balance sheets (See Note 20 — “Securities Loaned”).