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Commitments, Contingencies and Guarantees
 12 Months Ended
Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments, Contingencies and Guarantees Commitments, Contingencies and Guarantees
Contractual Obligations and Commitments
The following table summarizes certain of the Company’s contractual obligations at December 31, 2023 (in thousands):
TotalLess Than 1 Year1-3 Years3-5 YearsMore Than 5 Years
Debt and collateralized borrowings1
$1,190,000 $540,000 $300,000 $350,000 $— 
Operating leases2
189,186 31,594 48,028 32,624 76,940 
Finance leases2
5,077 1,712 2,738 627 — 
Interest on debt and collateralized borrowings3
157,560 49,815 68,467 39,278 — 
Interest on Short-term borrowings71 71 — — — 
One-time transition tax4
18,831 8,694 10,137 — — 
Other5
12,744 12,744 — — — 
Total contractual obligations$1,573,469 $644,630 $429,370 $422,529 $76,940 
_______________________________________
1Debt and collateralized borrowings reflects $255.5 million of BGC Group 3.750% Senior Notes (the $255.5 million represents the principal amount of the debt; the carrying value of the BGC Group 3.750% Senior Notes as of December 31, 2023 was approximately $254.8 million), $288.2 million of BGC Group 4.375% Senior Notes (the $288.2 million represents the principal amount of the debt; the carrying value of the BGC Group 4.375% Senior Notes as of December 31, 2023 was approximately $286.7 million) and $347.2 million of BGC Group 8.000% Senior Notes (the $347.2 million represents the principal amount of the debt; the carrying value of the BGC Group 8.000% Senior Notes as of December 31, 2023 was approximately $343.9 million). Debt and collateralized borrowings reflects $44.5 million of BGC Partners 3.750% Senior Notes (the $44.5 million represents the principal amount of the debt; the carrying value of the BGC Partners 3.750% Senior Notes as of December 31, 2023 was approximately $44.4 million), $11.8 million of BGC Partners 4.375% Senior Notes (the $11.8 million represents the principal amount of the debt; the carrying value of the BGC Partners 4.375% Senior Notes as of December 31, 2023 was approximately $11.8 million) and $2.8 million of BGC Partners 8.000% Senior Notes (the $2.8 million represents the principal amount of the debt; the carrying value of the BGC Partners 8.000% Senior Notes as of December 31, 2023 was approximately $2.7 million). See Note 17—“Notes Payable, Other and Short-Term Borrowings” for more information regarding these obligations, including timing of payments and compliance with debt covenants.
2Operating leases and finance leases are related to rental payments under various non-cancelable leases, principally for office space, data centers and office equipment and are presented net of sublease payments to be received. As of December 31, 2023, there were no sublease payments to be received over the life of the agreements.
3Interest on debt and collateralized borrowings reflects a total of $7.1 million of interest expense associated with the BGC Group 3.750% Senior Notes, $1.2 million of interest expense associated with the BGC Partners 3.750% Senior Notes, $24.5 million of interest expense associated with the BGC Group 4.375% Senior Notes, $1.0 million of interest expense associated with the BGC Partners 4.375% Senior Notes, $122.3 million of interest expense associated with the BGC Group 8.000% Senior Notes, and $1.0 million of interest expense associated with the BGC Partners 8.000% Senior Notes. Interest on debt and collateralized borrowings also includes interest on the undrawn portion of the committed unsecured senior Revolving Credit Agreement which was calculated through the maturity date of the facility, which is March 10, 2025. As of December 31, 2023, the undrawn portion of the committed unsecured Revolving Credit Agreement was $135.0 million.
4The Company completed the calculation of the one-time transition tax on the deemed repatriation of foreign subsidiaries’ earnings pursuant to the Tax Act and previously recorded a net cumulative tax expense of $28.6 million, net of foreign tax credits, with an election to pay the taxes over eight years with 40% to be paid in equal installments over the first five years and the remaining 60% to be paid in installments of 15%, 20% and 25% in years six, seven and eight, respectively. The cumulative remaining balance as of December 31, 2023 is $18.8 million.
5Other contractual obligations reflect commitments of $12.7 million to make charitable contributions, which are recorded as part of “Accounts payable, accrued and other liabilities” in the Company’s Consolidated Statements of Financial Condition. The amount payable each year reflects an estimate of future Charity Day obligations.
The Company is obligated for minimum rental payments under various non-cancelable operating leases, principally for office space, expiring at various dates through 2039. Certain of the leases contain escalation clauses that require payment of additional rent to the extent of increases in certain operating or other costs.
As of December 31, 2023, minimum lease payments under these arrangements are as follows (in thousands):
Net Lease Commitment
Operating leasesFinance leases
2024$31,594 $1,712 
202527,075 1,448 
202620,953 1,290 
202719,231 627 
202813,393 — 
2029 and thereafter76,940 — 
Total$189,186 $5,077 
The lease obligations shown above are presented net of payments to be received under a non-cancelable sublease. There are no sublease payments to be received over the life of the agreement.
In addition to the above obligations under non-cancelable operating leases, the Company is also obligated to Cantor for rental payments under Cantor’s various non-cancelable leases with third parties, principally for office space and computer equipment, expiring at various dates through 2039. Certain of these leases have renewal terms at the Company’s option and/or escalation clauses (primarily based on the Consumer Price Index). Cantor allocates a portion of the rental payments to the Company based on square footage used.
The Company also allocates a portion of the rental payments for which it is obligated under non-cancelable operating leases to Cantor and its affiliates. These allocations are based on square footage used (see Note 13—“Related Party Transactions” for more information).
Rent expense for the years ended December 31, 2023, 2022 and 2021 was $41.5 million, $40.2 million and $49.4 million, respectively. Rent expense is included as part of “Occupancy and equipment” in the Company’s Consolidated Statements of Operations.
In the event the Company anticipates incurring costs under any of its leases that exceed anticipated sublease revenues, it recognizes a loss and records a liability for the present value of the excess lease obligations over the estimated sublease rental income. There was no liability for future lease payments associated with vacant space as of December 31, 2023, 2022 and 2021.
Contingent Payments Related to Acquisitions
Since 2016, the Company has completed acquisitions whose purchase price included an aggregate of approximately 3.3 million shares of the Company’s Class A common stock (with an acquisition date fair value of approximately $13.5 million), 0.1 million LPUs (with an acquisition date fair value of approximately $0.2 million), 0.2 million RSUs (with an acquisition date fair value of approximately $1.2 million) and $43.1 million in cash that may be issued contingent on certain targets being met through 2027.
The Company issued 1.2 million contingent shares of BGC Class A common stock and $8.0 million for acquisitions during 2023. The Company did not issue any contingent shares of BGC Class A common stock, LPUs, RSUs or cash for acquisitions during 2022.
During the year ended December 31, 2023, the contingent cash consideration increased by approximately $0.6 million to $15.1 million in cash that may be paid due to an increase in probability of payout. During the year ended December 31, 2022, the contingent cash consideration increased by approximately $2.6 million to $14.5 million in cash that may be paid due to an increase in probability of payout.
As of December 31, 2023, the Company has issued 1.4 million shares of its Class A common stock, 0.2 million RSUs and paid $53.4 million in cash related to contingent payments for acquisitions completed since 2016.
As of December 31, 2023, 0.9 million shares of the Company’s Class A common stock remain to be issued, and $4.2 million in cash remains to be paid, net of forfeitures and other adjustments, if the targets are met.
The Company’s contingent considerations are classified as Level 3 liabilities. See Note 12—“Fair Value of Financial Assets and Liabilities” for additional information.
Contingencies
In the ordinary course of business, various legal actions are brought and are pending against the Company and its subsidiaries in the U.S. and internationally. In some of these actions, substantial amounts are claimed. The Company is also involved, from time to time, in reviews, examinations, investigations and proceedings by governmental and self-regulatory agencies (both formal and informal) regarding the Company’s businesses, operations, reporting or other matters, which may result in regulatory, civil and criminal judgments, settlements, fines, penalties, injunctions, enhanced oversight, remediation, or other relief. The following generally does not include matters that the Company has pending against other parties which, if successful, would result in awards in favor of the Company or its subsidiaries.
Employment, Competitor-Related and Other Litigation
From time to time, the Company and its subsidiaries are involved in litigation, claims and arbitrations in the U.S. and internationally, relating to, inter alia, various employment matters, including with respect to termination of employment, hiring of employees currently or previously employed by competitors, terms and conditions of employment and other matters. In light of the competitive nature of the brokerage industry, litigation, claims and arbitration between competitors regarding employee hiring are not uncommon. The Company is also involved, from time to time, in other reviews, investigations and proceedings by governmental and self-regulatory agencies (both formal and informal) regarding the Company’s businesses. Any such actions may result in regulatory, civil or criminal judgments, settlements, fines, penalties, injunctions, enhanced oversight, remediation, or other relief.
Legal reserves are established in accordance with U.S. GAAP guidance on Accounting for Contingencies when a material legal liability is both probable and reasonably estimable. Once established, reserves are adjusted when there is more information available or when an event occurs requiring a change. The outcome of such items cannot be determined with certainty. The Company is unable to estimate a possible loss or range of loss in connection with specific matters beyond its current accruals and any other amounts disclosed. Management believes that, based on currently available information, the final outcome of these current pending matters will not have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.
Letter of Credit Agreements
The Company has irrevocable uncollateralized letters of credit with various banks, where the beneficiaries are clearing organizations through which it transacts, that are used in lieu of margin and deposits with those clearing organizations. As of December 31, 2023 and 2022, the Company was contingently liable for $1.4 million and $1.6 million, respectively, under these letters of credit.
Risk and Uncertainties
The Company generates revenues by providing financial intermediary and brokerage activities to institutional customers and by executing and, in some cases, clearing transactions for institutional counterparties. Revenues for these services are transaction-based. As a result, revenues could vary based on the transaction volume of global financial markets. Additionally, financing is sensitive to interest rate fluctuations, which could have an impact on the Company’s overall profitability.
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times, may exceed the FDIC maximum coverage limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s Consolidated Financial Statements. For the year ended December 31, 2023 and 2022, the Company did not incur losses on any FDIC insured cash accounts.
During the years ended December 31, 2023 and 2022, the Company reserved $9.0 million and $11.4 million, respectively, in connection with potential losses associated with Russia’s Invasion of Ukraine, which is included in “Other expenses” in the Company’s Consolidated Statements of Operations, and which was recorded as part of the CECL reserve (see Note 25—“Current Expected Credit Losses” for additional information).
Insurance
The Company is self-insured for health care claims, up to a stop-loss amount for eligible participating employees and qualified dependents in the U.S., subject to deductibles and limitations. The Company’s liability for claims incurred but not reported is determined based on an estimate of the ultimate aggregate liability for claims incurred. The estimate is calculated from actual claim rates and adjusted periodically as necessary. The Company has accrued $3.7 million and $2.4 million in health care claims as of December 31, 2023 and 2022, respectively. The Company does not expect health care claims to have a material impact on its financial condition, results of operations, or cash flows.
Guarantees
The Company provides guarantees to securities clearinghouses and exchanges which meet the definition of a guarantee under FASB interpretations. Under these standard securities clearinghouse and exchange membership agreements, members are required to guarantee, collectively, the performance of other members and, accordingly, if another member becomes unable to satisfy its obligations to the clearinghouse or exchange, all other members would be required to meet the shortfall. In the opinion of management, the Company’s liability under these agreements is not quantifiable and could exceed the cash and securities it has posted as collateral. However, the potential of being required to make payments under these arrangements is remote. Accordingly, no contingent liability has been recorded in the Company’s Consolidated Statements of Financial Condition for these agreements.