ADMINISTRATIVE PROCEEDING
File No. 3-20107

September 30, 2020 – The Securities and Exchange Commission today announced settled charges against BGC Partners, Inc. for false and misleading disclosures concerning how it calculated a key non-GAAP financial measure, which it called post-tax distributable earnings or Post-Tax DE.

According to the SEC’s order, from 2015 through 2016, BGC misleadingly described Post-Tax DE as “pre-tax distributable earnings adjusted to assume that all pre-tax distributable earnings were taxed at the same effective rate.” The order finds that BGC excluded certain expenses from its calculation of Pre-Tax DE, while continuing to take the benefit of the tax deduction associated with these expenses when it calculated the tax rate on distributable earnings and ultimately, Post-Tax DE. The order also finds that BGC falsely stated in its earnings releases that the provision for taxes on Pre-Tax DE took into account all of the adjustments that it made to Pre-Tax DE. According to the order, because BGC included these tax deductions in its Post-Tax DE calculation, its Post-Tax DE figure was inflated by over 30% in its year-end earnings release for 2015.

The order finds that BGC violated the antifraud provisions of Sections 17(a)(2) and (3) of the Securities Act of 1933, and the reporting provisions of Section 13(a) of the Securities Exchange Act of 1934 and Rule 13a-11 thereunder, as well as Rule 100(b) of Regulation G of the Exchange Act, which pertains to the reporting of non-GAAP performance measures. Without admitting or denying the SEC’s findings, BGC consented to the entry of a cease-and-desist order and agreed to pay a $1.4 million civil penalty.

The SEC’s investigation was conducted by Shannon Keyes, Kenneth Gottlieb, and Sandeep Satwalekar, and the matter was supervised by Sanjay Wadhwa, all of the SEC’s New York Regional Office.