Equity Method Investments and Investments Carried Under the Measurement Alternative

(in thousands)	Percent Ownership¹			December 31, 2020		December 31, 2019
Advanced Markets Holdings		43	%	$	8,867	$	10,259
China Credit BGC Money Broking Company Limited		33	%		15,119		12,214
Freedom International Brokerage		45	%		9,800		10,142
Other					3,873		7,385
Equity method investments				$	37,659	$	40,000
Investments carried under measurement alternative					349		349
Total equity method and investments carried under measurement alternative				$	38,008	$	40,349

The carrying value of the Company’s equity method investments was $37.7 million and $40.0 million as of December 31, 2020 and 2019, respectively, and is included in “Investments” in the Company’s consolidated statements of financial condition.

The Company recognized gains of $5.0 million, $4.1 million and $7.4 million related to its equity method investments for the years ended December 31, 2020, 2019 and 2018, 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 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. For the years ended December 31, 2019 and 2018, the Company did not recognize any impairment charges relating to existing equity method investments.

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

	Year Ended December 31,
	2020		2019		2018
Statements of operations:
Total revenues	$	94,744	$	77,211	$	85,619
Total expenses		71,241		61,680		72,906
Net income	$	23,503	$	15,531	$	12,713

	December 31,
	2020		2019
Statements of financial condition:
Cash and cash equivalents	$	89,627	$	64,614
Fixed assets, net		2,806		3,120
Other assets		29,065		22,782
Total assets	$	121,498	$	90,516
Payables to related parties		2,000		2,000
Other liabilities		70,020		46,287
Total partners’ capital		49,478		42,229
Total liabilities and partners’ capital	$	121,498	$	90,516

See Note 16—“Related Party Transactions” for information regarding related party transactions with unconsolidated entities included in the Company’s consolidated financial statements.

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 was $0.4 million as of December 31, 2020 and 2019, 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 both the years ended December 31, 2020 and 2019.

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, 2020 and 2019. 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. These equity investments are accounted for using the measurement alternative in accordance with the guidance on recognition and measurement. The Company recognized $0.4 million of unrealized losses and $18.2 million of unrealized gains to reflect observable transactions for these shares during the years ended December 31, 2020 and 2019, respectively. The unrealized gains (losses) are reflected in “Other income (loss)” in the Company’s consolidated statements of operations.

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, 2020

December 31, 2019

Investment

Maximum

Exposure to Loss

Investment

Maximum

Exposure to Loss

Variable interest entities¹

1,258

2,238

4,699

5,679

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 $7.2 million and $7.4 million as of December 31, 2020 and 2019, 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 $1.0 million and $2.1 million as of December 31, 2020 and 2019, respectively. The Company’s exposure to economic loss on this VIE was $4.8 million and $2.8 million as of December 31, 2020 and 2019, respectively.