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Item 9A. Controls and Procedures

2023-03-01 compared with 2022-02-28 · 56 added, 77 removed, 369 unchanged (26% of the section changed)

8 unchanged sentences

Our internal control over financial reporting includes policies and procedures that are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S.

Based on the results of our 2022 evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2022.

We reviewed the results of management's assessment with our Audit Committee.

The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which is included in this Annual Report on Form 10-K.

Material Weakness Identified

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.

As previously disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2020, management identified the following control deficiencies that in combination constituted a material weakness in our internal control over financial reporting as of December 31, 2020:

• We did not design an effective control over wire payments in the U.K.

to vendors, including taxing authorities.

Specifically, we did not require independent validation of vendor banking details for wire payments where vendors had requested remittance be made to a different account than the one recorded within the vendor master listing.

• We did not operate an effective control in the U.K.

to validate bank information to the vendor master listing when effecting wire payments.

• We did not design an effective control over the reconciliation of receipts and disbursements for certain U.K.

partnerships in relation to partner related payments.

Remediation of Material Weakness

Our management, with the oversight of the Audit Committee of our Board of Directors, took immediate action to initiate a plan to remediate the material weakness previously identified and disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2020.

The below remediation measures were designed to remediate the control deficiencies and enhance our overall internal control environment:

• Wire payments are not permitted to be made to vendor bank accounts other than from the master listing.

• Changes to bank details within the vendor master listing can only be made once an independent validation has been performed.

• Prior to the release of wire payments, the payee bank details are required to be validated to the vendor master listing by an independent department.

• A reconciliation of disbursements and payments to taxing authorities has been implemented with respect to certain U.K.

partnerships.

Based upon management’s assessment of our implemented controls to address the material weakness noted above, we believe the material weakness identified has been remediated as of December 31, 2021.

Such report expresses an unqualified opinion on the effectiveness of the Company's internal controls over financial reporting as of December 31, 2022.

Changes in Internal Control over Financial Reporting

During the year ended December 31, 2021, there were no changes in our internal control over financial reporting, other than the remediation measures implemented as described above, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During the year ended December 31, 2022, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

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The Exhibits designated by an asterisk (*) are management contracts and compensation plans and arrangements required to be filed as Exhibits to this Report.

Certain schedules and exhibits designated by two asterisks (**) have been omitted pursuant to Item 601(a)(5) of Regulation S-K promulgated by the SEC.

The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.

Certain exhibits have been previously filed with the SEC pursuant to the Securities Exchange Act of 1934 (Commission File Number 0-28191).

1 unchanged sentence

Number Exhibit Title

1.1 Controlled Equity Offering Sales SM Agreement, dated August 12, 2022, between BGC Partners, Inc.

and Cantor Fitzgerald & Co.

(incorporated by reference to Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 12, 2022)

2.1 Agreement and Plan of Merger, dated as of May 29, 2007, by and among eSpeed, Inc., BGC Partners, Inc., Cantor Fitzgerald, L.P., BGC Partners, L.P., BGC Global Holdings, L.P.

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2.8 Agreement and Plan of Merger, dated December 22, 2015, by and among BGC Partners, Inc., JPI Merger Sub 1, Inc., JPI Merger Sub 2, LLC, Jersey Partners Inc., New JP Inc., Michael Gooch and Colin Heffron (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 23, 2015)

Number Exhibit Title

2.9 Transaction Agreement, dated as of July 17, 2017, by and among BGC Partners, Inc.

1 unchanged sentence

and CF Real Estate Finance Holdings GP, LLC (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 21, 2017)

Number Exhibit Title

2.10 Amended and Restated Separation and Distribution Agreement, dated as of November 23, 2018, by and among Cantor Fitzgerald, L.P., BGC Partners, Inc., BGC Holdings, L.P., BGC Partners, L.P., BGC Global Holdings, L.P., Newmark Group, Inc., Newmark Holdings, L.P.

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(incorporated by reference to Exhibit 2.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 8, 2021)

2.14 Corporate Conversion Agreement, dated as of November 15, 2022, by and among BGC Partners, Inc., BGC Group, Inc., BGC Holdings, L.P., BGC GP, LLC, BGC Partners II, Inc., BGC Partners II, LLC, BGC Holdings Merger Sub, LLC and, solely for the purposes of certain provisions therein, Cantor Fitzgerald, L.P.

(incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 16, 2022)**

3.1 Restated Certificate of Incorporation of BGC Partners, Inc.

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3.750% Senior Notes due 2024 (incorporated by reference to Exhibit 4.3 to the Registrant’s Form 8-K filed with the SEC on September 30, 2019)

Number Exhibit Title

4.9 Second Supplemental Indenture, dated as of July 10, 2020, between BGC Partners, Inc.

4 unchanged sentences

and the Investors named therein (incorporated by reference to Exhibit 10.6 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999)

Number Exhibit Title

10.2 Registration Rights Agreement by and between Cantor Fitzgerald, L.P.

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Administrative Services Agreement dated January 9, 2012 (incorporated by reference to Exhibit 10.60 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 15, 2012)

Number Exhibit Title

10.17 Tower Bridge International Services L.P.

2 unchanged sentences

and Cantor Index Limited Administrative Services Agreement dated January 9, 2012 (incorporated by reference to Exhibit 10.62 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 15, 2012)

Number Exhibit Title

10.19 Tower Bridge International Services L.P.

26 unchanged sentences

10.33 Second Amended and Restated Agreement of Limited Partnership of BGC Holdings, L.P., dated as of December 13, 2017 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2017)

Number Exhibit Title

10.34 Amendment No.

1 unchanged sentence

10.35 Second Amended and Restated Agreement of Limited Partnership of BGC Partners, L.P., dated as of December 13, 2017 (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2017)

Number Exhibit Title

10.36 Second Amended and Restated Agreement of Limited Partnership of BGC Global Holdings, L.P., dated as of December 13, 2017 (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2017)

22 unchanged sentences

(incorporated by reference to Exhibit 10.47 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 1, 2021)

10.47 Amended and Restated Credit Agreement, dated as of March 10, 2022, by and among BGC Partners, Inc., as the Borrower, certain subsidiaries of the Borrower, as Guarantors, the several financial institutions from time to time as parties thereto, as Lenders, and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 14, 2022)

10.48 Support Agreement, dated as of November 15, 2022, by and among BGC Partners, Inc.

and Cantor Fitzgerald, L.P.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 16, 2022)**

21.1 List of subsidiaries of BGC Partners, Inc.

Number Exhibit Title

23.1 Consent of Ernst & Young LLP

5 unchanged sentences

The XBRL Instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the iXBRL document.

Number Exhibit Title

104 The cover page from this Annual Report on Form 10-K, formatted in inline XBRL (included in Exhibit 101).

1 unchanged sentence

Not Applicable

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K for the fiscal year ended December 31, 2021 to be signed on its behalf by the undersigned, thereunto duly authorized, on the 28th day of February, 2022.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K for the fiscal year ended December 31, 2022 to be signed on its behalf by the undersigned, thereunto duly authorized, on the 1st day of March, 2023.

BGC Partners, Inc.

4 unchanged sentences

/S/ HOWARD W.

LUTNICK Chairman of the Board and Chief Executive Officer February 28, 2022

LUTNICK Chairman of the Board and Chief Executive Officer March 1, 2023

Lutnick (Principal Executive Officer)

/S/ STEVEN BISGAY Chief Financial Officer February 28, 2022

Steven Bisgay (Principal Financial and Accounting Officer)

BELL Director February 28, 2022

/S/ STEPHEN T.

CURWOOD Director February 28, 2022

/S/ WILLIAM J.

MORAN Director February 28, 2022

RICHARDS Director February 28, 2022

HAUF Chief Financial Officer March 1, 2023

Hauf (Principal Financial and Accounting Officer)

BELL Director March 1, 2023

/S/ MARTIN LAGUERRE Director March 1, 2023

Martin Laguerre

RICHARDS Director March 1, 2023

/S/ ARTHUR U.

MBANEFO Director February 28, 2022

MBANEFO Director March 1, 2023

[Signature page to the Annual Report on Form 10-K for the period ended December 31, 2022 dated March 1, 2023.]

BGC PARTNERS, INC.

6 unchanged sentences

Receivables from related parties 9,160 10,038

Note receivable from related party 1,043,189 1,296,082

Notes receivable from related parties 1,045,966 1,043,189

Other assets 91,654 70,261

2 unchanged sentences

Accounts payable, accrued and other liabilities $ 23,789 $ 29,539

Notes payable 1,043,189 1,296,082

Notes payable and other borrowings 1,045,966 1,043,189

Total liabilities 1,069,755 1,072,728

73 unchanged sentences

Net cash provided by financing activities ( 29,423 ) ( 565,854 ) 184,471

( 565,854 ) 184,471 360,907

Net increase (decrease) in cash and cash equivalents 18 7 ( 20 )

15 unchanged sentences

The accompanying Parent Company Only Financial Statements of BGC Partners should be read in conjunction with the Consolidated Financial Statements of BGC Partners and subsidiaries and the notes thereto.

In addition, certain reclassifications have been made to previously reported amounts to conform to the current presentation.

For the year ended December 31, 2022, the Company declared and paid cash dividends of $ 0.04 per share to BGC Class A and Class B common stockholders.

For the year ended December 31, 2021 and 2020, the comparable cash dividend amounts were $ 0.04 per share and $ 0.17 per share, respectively.

Revisions of Previously Issued Financial Statements

On July 30, 2021, the Company completed the purchase of the Futures Exchange Group for a purchase price of $4.9 million at closing, plus the cash held at closing by the Futures Exchange Group, and an earn-out, only payable out of the Company's portion of the profits of the Futures Exchange Group, capped at the amount Cantor contributed to the Futures Exchange Group prior to closing.

The Futures Exchange Group acquisition has been determined to be a combination of entities under common control that resulted in a change in the reporting entity.

Accordingly, the financial results of the Company have been recast to include the financial results of the Futures Exchange Group in the current and prior periods as if the Futures Exchange Group had always been consolidated.

The assets and liabilities of the Futures Exchange Group have been recorded in the Company's consolidated statements of financial condition at the seller's historical carrying value.

The purchase of the Futures Exchange Group was accounted for as an equity transaction for the period ended September 30, 2021 (the period in which the transaction occurred).

For more information about the revisions to our previously issued financial statements, see Note 1—“Organization and Basis of Presentation” in the Company’s consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Commitments, Contingencies and Guarantees

On March 13, 2015, subsidiaries of the Company entered into a secured loan arrangement of $ 28.2 million, under which it pledged certain fixed assets as security for a loan.

This arrangement was guaranteed by the Parent Company, incurred interest at a fixed rate of 3.70 % and matured on March 13, 2019, therefore there were no borrowings outstanding as of December 31, 2021 and 2020.

On July 10, 2015, the Company and GFI entered into a guarantee pursuant to which the Parent Company has guaranteed the obligations of GFI under GFI’s 8.375 % Senior notes due in the remaining aggregate principal amount of $ 240.0 million and the indenture for the notes, dated as of July 19, 2011, between GFI and The Bank of New York Mellon Trust Company, N.A., as Trustee.

Pursuant to the terms of the indenture, the interest rate on the notes was reduced effective July 19, 2015 as a result of prior ratings increases following the acquisition of GFI by BGC Partners.

In addition, on January 13, 2016 the interest rate was further reduced as a result of another ratings increase.

The Company and GFI will share any cost savings, including interest and other costs, resulting from the credit enhancement provided by BGC Partners.

On May 31, 2017, the Company entered into a secured loan arrangement of $ 29.9 million, under which it pledged certain fixed assets as security for a loan.

This arrangement incurs interest at a fixed rate of 3.44 % per year and matured on May 31, 2021;

therefore, there were no borrowings outstanding as of December 31, 2021.

As of December 31, 2020, the Company had $ 4.0 million outstanding related to this secured loan arrangement.

The book value of the fixed assets pledged as of December 31, 2020 was $ 0.8 million.

On April 8, 2019, the Company entered into a secured loan arrangement of $ 15.0 million, under which it pledged certain fixed assets as security for a loan.

This arrangement is guaranteed by the Parent Company, incurs interest at a fixed rate of 3.77 % and matures on April 8, 2023.

As of December 31, 2021 and 2020, the Company had $ 5.9 million and $ 9.6 million outstanding related to this secured loan arrangement, respectively.

The book value of the fixed assets pledged as of December 31, 2021 was $ 0.1 million.

The book value of the fixed assets pledged as of December 31, 2020 was $ 1.2 million.

On May 31, 2017, the Company entered into a $ 29.9 million secured loan arrangement, under which it pledged certain fixed assets as security for a loan.

This arrangement is guaranteed by the Parent Company and incurred interest at a fixed rate of 3.44 % per year and matured on May 31, 2021;

therefore, there were no borrowings outstanding as of December 31, 2022 and 2021.

The Company did not record any interest expense related to this arrangement for the year ended December 31, 2022.

The Company recorded interest expense related to this secured loan arrangement of $ 40 thousand and $ 0.3 million for the years ended December 31, 2021 and 2020, respectively.

On April 8, 2019, the Company entered into a $ 15.0 million secured loan arrangement, under which it pledged certain fixed assets as security for a loan.

This arrangement incurs interest at a fixed rate of 3.89 % and matures on April 19, 2023.

of December 31, 2021 and December 31, 2020, the Company had $ 3.8 million and $ 6.3 million, respectively, outstanding related to this secured loan arrangement.

The book value of the fixed assets pledged as of December 31, 2021 was $ 1.0 million.

The book value of the fixed assets pledged as of December 31, 2020 was $ 2.7 million.

Long-Term Debt

Unsecured Senior Revolving Credit

This arrangement is guaranteed by the Parent Company and incurs interest at a fixed rate of 3.77 % and matures on April 8, 2023.

As of December 31, 2022 and December 31, 2021, the Company had $ 2.0 million and $ 5.9 million, respectively, outstanding related to this secured loan arrangement.

The book value of the fixed assets pledged as of December 31, 2022 and 2021 was $ 10 thousand and $ 0.1 million, respectively.

The Company recorded interest expense related to this secured loan arrangement of $ 0.1 million, $ 0.3 million and $ 0.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.

On April 19, 2019, the Company entered into a $ 10.0 million secured loan arrangement, under which it pledged certain fixed assets as security for a loan.

This arrangement is guaranteed by the Parent Company and incurs interest at a fixed rate of 3.89 % and matures on April 19, 2023.

As of December 31, 2022 and December 31, 2021, the Company had $ 1.3 million and $ 3.8 million, respectively, outstanding related to this secured loan arrangement.

The book value of the fixed assets pledged as of December 31, 2022 and 2021 was $ 0.3 million and $ 1.0 million, respectively.

The Company recorded interest expense related to this secured loan arrangement of $ 0.1 million, $ 0.2 million and $ 0.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Notes Payable and Other Borrowings

Unsecured Senior Revolving Credit Agreement

On November 28, 2018, the Company entered into the Revolving Credit Agreement with Bank of America, N.A., as administrative agent, and a syndicate of lenders, which replaced the existing committed unsecured senior revolving credit agreement.

The maturity date of the Revolving Credit Agreement was November 28, 2020, and the maximum revolving loan balance is $ 350.0 million.

Borrowings under this Revolving Credit Agreement bear interest at either LIBOR or a defined base rate plus additional margin.

The maturity date of the Revolving Credit Agreement was November 28, 2020, and the maximum revolving loan balance was $ 350.0 million.

Borrowings under this Revolving Credit Agreement bore interest at either LIBOR or a defined base rate plus additional margin.

On December 11, 2019, the Company entered into an amendment to the Revolving Credit Agreement.

9 unchanged sentences

The 5.125 % Senior Notes were general senior unsecured obligations of the Company.

The 5.125 % Senior Notes bore interest at a rate of 5.125 % per year, payable in cash on May 27 and November 27 of each year, commencing November 27, 2016 and ending the maturity date.

The 5.125 % Senior Notes bore interest at a rate of 5.125 % per year, payable in cash on May 27 and November 27 of each year,

commencing November 27, 2016 and ending on the maturity date.

Prior to maturity, on August 5, 2020, the Company commenced a cash tender offer for any and all $ 300.0 million outstanding aggregate principal amount of its 5.125 % Senior Notes.

3 unchanged sentences

On May 27, 2021, BGC repaid the remaining $ 256.0 million principal plus accrued interest on its 5.125 % Senior Notes.

The Company recorded interest expense related to the 5.125 % Senior Notes of $ 5.8 million, $ 16.3 million, and $ 16.2 million for the years ended December 31, 2021, 2020 and 2019.

The Company did not record any interest expense related to the 5.125% Senior Notes for the year ended December 31, 2022.

The Company recorded interest expense related to the 5.125 % Senior Notes of $ 5.8 million and $ 16.3 million for the years ended December 31, 2021 and 2020, respectively.

5.375 % Senior Notes

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The Company may redeem some or all of the 3.750 % Senior Notes at any time or from time to time for cash at certain “make-whole” redemption prices (as set forth in the Indenture).

If a “Change of Control Triggering Event” (as defined in the Indenture) occurs, holders may require the Company to purchase all or a portion of their

notes for cash at a price equal to 101 % of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the purchase date.

If a “Change of Control Triggering Event” (as defined in the Indenture) occurs, holders may require the Company to purchase all or a portion of their notes for cash at a price equal to 101 % of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the purchase date.

The initial carrying value of the 3.750 % Senior Notes was $ 296.1 million, net of discount and debt issuance costs of $ 3.9 million.

12 unchanged sentences

The carrying value of the 4.375 % Senior Notes was $ 298.2 million as of December 31, 2022.

The Company recorded interest expense related to the 4.375 % Senior Notes of $ 13.8 million and $ 6.5 million for years ended December 31, 2021 and 2020, respectively.

The Company did not record interest expense related to the 4.375 % Senior Notes for year ended December 31, 2019.

The Company recorded interest expense related to the 4.375 % Senior Notes of $ 13.8 million, $ 13.8 million, and $ 6.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures