Marketable Securities

9 Months Ended

Sep. 30, 2020

Marketable Securities [Abstract]

Marketable Securities

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 the Nasdaq 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 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. BGC transferred the remaining rights under the Nasdaq Earn-out 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, 2019 and expects to receive 992,247 shares in the fourth quarter of 2020. Newmark will recognize the remaining Nasdaq Earn-out of up to 6,945,729 shares of Nasdaq common stock ratably over approximately the next 7 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, 2020 and 2019, in connection with the Nasdaq Earn-out, Newmark recognized a gain of $121.9 million and $98.6 million, respectively, which is included in “Other income, net” in the accompanying unaudited condensed consolidated statements of operations. For further information, refer to the section titled “Exchangeable Preferred Partnership Units and Forward Contracts” 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 343,562 of the Nasdaq shares during the three months ended March 31, 2020 and 100,000 and 350,000 for the three and nine months ended September 30, 2019, respectively. Newmark received gross proceeds of $34.7 million during the three months ended March 31, 2020 and $10.4 million and $32.6 million during the three and nine months ended September 30, 2019, respectively, on the Nasdaq shares sold. Newmark recognized a gain on the sale of these shares of $2.2 million for the three months ended March 31, 2020 and a gain of $2.2 million and $4.1 million for the three and nine months ended September 30, 2019, respectively. Newmark did not record unrealized gains or losses on the mark-to-market of these securities for the three and nine months ended September 30, 2020. Newmark recorded unrealized gains (loss) on the mark-to-market of these securities of $(0.7) million and $4.4 million for the three and nine months ended September 30, 2019, respectively. Realized and unrealized gains on the mark-to-market of these shares are included in “Other income, net” on the accompanying unaudited condensed consolidated statements of operations. As of September 30, 2020 and December 31, 2019, Newmark reflected $121.9 million and $36.8 million related to Nasdaq shares, respectively, included in “Marketable securities” on the accompanying unaudited condensed consolidated balance sheets (see Note 20 — “Securities Loaned”).