UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from �� to

Commission File No. 000-29961

ALLIANCEBERNSTEIN L.P.

(Exact name of registrant as specified in its charter)


Delaware						13-4064930
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

~~1345 Avenue of the Americas, New York, NY 10105~~501 Commerce Street, Nashville, TN 37203

(Address of principal executive offices)

(Zip Code)

~~(212) 969-1000~~(615) 622-0000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes

☐

☒

Index

Securities registered pursuant to Section 12(g) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

None

The number of units of limited partnership interest outstanding as of ~~March 31,~~September 30, 2021 was ~~272,675,165.~~270,935,464.

Index

ALLIANCEBERNSTEIN L.P.

Index to Form 10-Q


		Page

	Part I

	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Statements of Financial Condition	1

	Condensed Consolidated Statements of Income	3

	Condensed Consolidated Statements of Comprehensive Income	4

	Condensed Consolidated Statements of Changes in Partners' Capital	5

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5051

Item 4.	Controls and Procedures	5051

	Part II

	OTHER INFORMATION

Item 1.	Legal Proceedings	5152

Item 1A.	Risk Factors	5152

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5152

Item 3.	Defaults Upon Senior Securities	5152

Item 4.	Mine Safety Disclosures	5152

Item 5.	Other Information	5152

Item 6.	Exhibits	5253

SIGNATURE		5354

Index

Part I

FINANCIAL INFORMATION

Item 1. Financial Statements

ALLIANCEBERNSTEIN L.P.

AND SUBSIDIARIES

Condensed Consolidated Statements of Financial Condition

(in thousands, except unit amounts)

(unaudited)


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	960,452	$	1,037,400	Cash and cash equivalents	$	1,209,867	$	1,037,400
Cash and securities segregated, at fair value (cost: $1,412,296 and $1,752,483)		1,412,873		1,753,478
Cash and securities segregated, at fair value (cost: $907,630 and $1,752,483)						Cash and securities segregated, at fair value (cost: $907,630 and $1,752,483)	908,539		1,753,478
Receivables, net:	Receivables, net:					Receivables, net:
Brokers and dealers	Brokers and dealers	197,444		92,638		Brokers and dealers	210,871		92,638
Brokerage clients	Brokerage clients	1,814,044		1,713,377		Brokerage clients	2,042,720		1,713,377
AB funds fees	AB funds fees	260,598		325,407		AB funds fees	274,841		325,407
Other fees	Other fees	143,819		148,746		Other fees	168,562		148,746
Investments:	Investments:					Investments:
Long-term incentive compensation-related	Long-term incentive compensation-related	58,730		60,114		Long-term incentive compensation-related	62,197		60,114
Other	Other	140,928		193,261		Other	160,921		193,261
Assets of consolidated company-sponsored investment funds:	Assets of consolidated company-sponsored investment funds:					Assets of consolidated company-sponsored investment funds:
Cash and cash equivalents	Cash and cash equivalents	38,561		36,506		Cash and cash equivalents	32,904		36,506
Investments	Investments	308,043		302,582		Investments	276,199		302,582
Other assets	Other assets	20,474		12,244		Other assets	12,797		12,244
Furniture, equipment and leasehold improvements, net	Furniture, equipment and leasehold improvements, net	153,326		147,874		Furniture, equipment and leasehold improvements, net	170,256		147,874
Goodwill	Goodwill	3,095,093		3,082,778		Goodwill	3,091,767		3,082,778
Intangible assets, net	Intangible assets, net	42,843		44,496		Intangible assets, net	43,627		44,496
Deferred sales commissions, net	Deferred sales commissions, net	67,119		64,066		Deferred sales commissions, net	76,005		64,066
Right-of-use assets	Right-of-use assets	412,839		418,455		Right-of-use assets	433,946		418,455
Other assets	Other assets	327,680		264,418		Other assets	441,095		264,418
Total assets	Total assets	$	9,454,866	$	9,697,840	Total assets	$	9,617,114	$	9,697,840

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL	LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL					LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL
Liabilities:	Liabilities:					Liabilities:
Payables:	Payables:					Payables:
Brokers and dealers	Brokers and dealers	$	278,936	$	216,403	Brokers and dealers	$	259,667	$	216,403
Securities sold not yet purchased	Securities sold not yet purchased	8,307		17,791		Securities sold not yet purchased	2,582		17,791
Brokerage clients	Brokerage clients	3,176,132		3,440,266		Brokerage clients	3,177,172		3,440,266
AB mutual funds	AB mutual funds	86,002		65,550		AB mutual funds	77,497		65,550
Accounts payable and accrued expenses	Accounts payable and accrued expenses	202,366		197,657		Accounts payable and accrued expenses	265,957		197,657
Lease liabilities	Lease liabilities	495,356		505,549		Lease liabilities	506,563		505,549
Liabilities of consolidated company-sponsored investment funds	Liabilities of consolidated company-sponsored investment funds	42,531		30,620		Liabilities of consolidated company-sponsored investment funds	32,594		30,620
Accrued compensation and benefits	Accrued compensation and benefits	402,507		335,122		Accrued compensation and benefits	795,878		335,122

Debt	Debt	625,000		675,000		Debt	390,000		675,000

Total liabilities	Total liabilities	5,317,137		5,483,958		Total liabilities	5,507,910		5,483,958

Index


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Commitments and contingencies (See Note 12)	Commitments and contingencies (See Note 12)	0		0		Commitments and contingencies (See Note 12)	0		0

Redeemable non-controlling interest	Redeemable non-controlling interest	88,567		102,359		Redeemable non-controlling interest	117,804		102,359

Capital:	Capital:					Capital:
General Partner	General Partner	42,022		41,776		General Partner	41,447		41,776
Limited partners: 272,675,165 and 270,509,658 units issued and outstanding		4,253,904		4,229,485
Limited partners: 270,935,464 and 270,509,658 units issued and outstanding						Limited partners: 270,935,464 and 270,509,658 units issued and outstanding	4,197,125		4,229,485
Receivables from affiliates	Receivables from affiliates	(1,725)		(8,316)		Receivables from affiliates	(8,453)		(8,316)
AB Holding Units held for long-term incentive compensation plans	AB Holding Units held for long-term incentive compensation plans	(143,807)		(57,219)		AB Holding Units held for long-term incentive compensation plans	(130,908)		(57,219)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(101,232)		(94,203)		Accumulated other comprehensive loss	(107,811)		(94,203)
Partners’ capital attributable to AB Unitholders	Partners’ capital attributable to AB Unitholders	4,049,162		4,111,523		Partners’ capital attributable to AB Unitholders	3,991,400		4,111,523

Total liabilities, redeemable non-controlling interest and capital	Total liabilities, redeemable non-controlling interest and capital	$	9,454,866	$	9,697,840	Total liabilities, redeemable non-controlling interest and capital	$	9,617,114	$	9,697,840

See Accompanying Notes to Condensed Consolidated Financial Statements.

Index

ALLIANCEBERNSTEIN L.P.

AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(in thousands, except per unit amounts)

(unaudited)


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
			2021		2020				2021		2020		2021		2020
Revenues:	Revenues:							Revenues:
Investment advisory and services fees	Investment advisory and services fees		$	703,466	$	621,725		Investment advisory and services fees	$	776,797	$	630,539	$	2,257,887	$	1,830,467
Bernstein research services	Bernstein research services		119,021		129,223			Bernstein research services	113,340		98,514		338,016		341,346
Distribution revenues	Distribution revenues		147,600		130,857			Distribution revenues	170,612		135,693		473,750		386,649
Dividend and interest income	Dividend and interest income		8,684		20,465			Dividend and interest income	8,794		9,070		26,136		42,227
Investment gains (losses)			1,928		(44,306)
Investment (losses) gains								Investment (losses) gains	(2,724)		1,106		3,385		(19,011)
Other revenues	Other revenues		27,711		25,511			Other revenues	26,973		26,583		80,584		78,186
Total revenues	Total revenues		1,008,410		883,475			Total revenues	1,093,792		901,505		3,179,758		2,659,864
Less: Interest expense	Less: Interest expense		1,144		9,319			Less: Interest expense	960		1,467		2,838		14,221
Net revenues	Net revenues		1,007,266		874,156			Net revenues	1,092,832		900,038		3,176,920		2,645,643

Expenses:	Expenses:							Expenses:
Employee compensation and benefits	Employee compensation and benefits		406,059		362,272			Employee compensation and benefits	433,928		357,821		1,275,694		1,069,731
Promotion and servicing:	Promotion and servicing:							Promotion and servicing:
Distribution-related payments	Distribution-related payments		162,254		140,145			Distribution-related payments	187,411		148,380		517,426		414,203
Amortization of deferred sales commissions	Amortization of deferred sales commissions		7,899		5,526			Amortization of deferred sales commissions	8,731		7,434		24,866		19,582
Trade execution, marketing, T&E and other	Trade execution, marketing, T&E and other		46,678		55,610			Trade execution, marketing, T&E and other	47,428		41,220		140,677		141,118

General and administrative:								General and administrative:
General and administrative	General and administrative		120,223		122,267			General and administrative	132,064		119,318		383,611		363,009

Real estate charges								Real estate charges	—		—		—		5,526
Contingent payment arrangements	Contingent payment arrangements		796		793			Contingent payment arrangements	838		813		2,472		2,413
Interest on borrowings	Interest on borrowings		1,294		2,834			Interest on borrowings	1,280		1,073		3,815		5,003
Amortization of intangible assets	Amortization of intangible assets		1,479		6,486			Amortization of intangible assets	1,502		6,833		4,502		20,042
Total expenses	Total expenses		746,682		695,933			Total expenses	813,182		682,892		2,353,063		2,040,627

Operating income	Operating income		260,584		178,223			Operating income	279,650		217,146		823,857		605,016

Income taxes	Income taxes		16,745		9,474			Income taxes	16,029		9,089		45,254		29,949

Net income	Net income		243,839		168,749			Net income	263,621		208,057		778,603		575,067

Net (loss) of consolidated entities attributable to non-controlling interests			(292)		(25,571)
Net (loss) income of consolidated entities attributable to non-controlling interests								Net (loss) income of consolidated entities attributable to non-controlling interests	(1,074)		81		2,207		(4,550)

Net income attributable to AB Unitholders	Net income attributable to AB Unitholders		$	244,131	$	194,320		Net income attributable to AB Unitholders	$	264,695	$	207,976	$	776,396	$	579,617

Net income per AB Unit:	Net income per AB Unit:							Net income per AB Unit:
Basic	Basic		$	0.89	$	0.71		Basic	$	0.96	$	0.77	$	2.82	$	2.13
Diluted	Diluted		$	0.89	$	0.71		Diluted	$	0.96	$	0.77	$	2.82	$	2.13

See Accompanying Notes to Condensed Consolidated Financial Statements.

Index

ALLIANCEBERNSTEIN L.P.

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
			2021		2020				2021		2020		2021		2020

Net income	Net income		$	243,839	$	168,749		Net income	$	263,621	$	208,057	$	778,603	$	575,067
Other comprehensive (loss):
Other comprehensive (loss) income:								Other comprehensive (loss) income:

Foreign currency translation adjustments, before tax	Foreign currency translation adjustments, before tax		(7,138)		(21,396)			Foreign currency translation adjustments, before tax	(9,573)		16,440		(14,623)		1,361
Income tax benefit			22		73
Income tax benefit (expense)								Income tax benefit (expense)	224		(98)		272		42
Foreign currency translation adjustments, net of tax	Foreign currency translation adjustments, net of tax		(7,116)		(21,323)			Foreign currency translation adjustments, net of tax	(9,349)		16,342		(14,351)		1,403

Changes in employee benefit related items:	Changes in employee benefit related items:							Changes in employee benefit related items:
Amortization of prior service cost	Amortization of prior service cost		6		6			Amortization of prior service cost	6		6		18		18
Recognized actuarial gain	Recognized actuarial gain		81		325			Recognized actuarial gain	324		325		729		975
Changes in employee benefit related items	Changes in employee benefit related items		87		331			Changes in employee benefit related items	330		331		747		993
Income tax (expense)	Income tax (expense)		0		(77)			Income tax (expense)	(2)		(2)		(4)		(80)
Employee benefit related items, net of tax	Employee benefit related items, net of tax		87		254			Employee benefit related items, net of tax	328		329		743		913

Other comprehensive (loss)			(7,029)		(21,069)
Less: Comprehensive (loss) in consolidated entities attributable to non-controlling interests			(292)		(25,571)
Other comprehensive (loss) income								Other comprehensive (loss) income	(9,021)		16,671		(13,608)		2,316
Less: Comprehensive (loss) income in consolidated entities attributable to non-controlling interests								Less: Comprehensive (loss) income in consolidated entities attributable to non-controlling interests	(1,074)		81		2,207		(4,550)
Comprehensive income attributable to AB Unitholders	Comprehensive income attributable to AB Unitholders		$	237,102	$	173,251		Comprehensive income attributable to AB Unitholders	$	255,674	$	224,647	$	762,788	$	581,933

See Accompanying Notes to Condensed Consolidated Financial Statements.

Index

ALLIANCEBERNSTEIN L.P.

AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Partners' Capital

(in thousands)

(unaudited)


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
General Partner’s Capital	General Partner’s Capital							General Partner’s Capital
Balance, beginning of period	Balance, beginning of period		$	41,776		$	41,225	Balance, beginning of period	$	41,953	$	38,647	$	41,776	$	41,225
Net income	Net income		2,441			1,943		Net income	2,647		2,079		7,764		5,796
Cash distributions to General Partner	Cash distributions to General Partner		(2,898)			(2,542)		Cash distributions to General Partner	(2,662)		(378)		(7,981)		(6,316)
Long-term incentive compensation plans activity	Long-term incentive compensation plans activity		(7)			2		Long-term incentive compensation plans activity	41		15		52		20
Issuance (retirement) of AB Units, net			710			(57)
(Retirement) of AB Units, net								(Retirement) of AB Units, net	(532)		(84)		(164)		(446)

Balance, end of period	Balance, end of period		42,022			40,571		Balance, end of period	41,447		40,279		41,447		40,279
Limited Partners' Capital	Limited Partners' Capital							Limited Partners' Capital
Balance, beginning of period	Balance, beginning of period		4,229,485			4,174,201		Balance, beginning of period	4,247,060		4,066,211		4,229,485		4,174,201
Net income	Net income		241,690			192,377		Net income	262,048		205,897		768,632		573,821
Cash distributions to Unitholders	Cash distributions to Unitholders		(286,813)			(251,261)		Cash distributions to Unitholders	(263,339)		(183,880)		(789,830)		(624,566)
Long-term incentive compensation plans activity	Long-term incentive compensation plans activity		(708)			335		Long-term incentive compensation plans activity	4,038		1,335		5,189		1,963
Issuance (retirement) of AB Units, net			70,250			(5,706)
(Retirement) of AB Units, net								(Retirement) of AB Units, net	(52,682)		(8,298)		(16,351)		(44,154)

Balance, end of period	Balance, end of period		4,253,904			4,109,946		Balance, end of period	4,197,125		4,081,265		4,197,125		4,081,265
Receivables from Affiliates	Receivables from Affiliates							Receivables from Affiliates
Balance, beginning of period	Balance, beginning of period		(8,316)			(9,011)		Balance, beginning of period	(7,799)		(9,167)		(8,316)		(9,011)

Long-term incentive compensation awards expense	Long-term incentive compensation awards expense		142			184		Long-term incentive compensation awards expense	541		205		700		598
Capital contributions from AB Holding			6,449			(452)
Capital contributions (to) from AB Holding								Capital contributions (to) from AB Holding	(1,195)		256		(837)		(293)
Balance, end of period	Balance, end of period		(1,725)			(9,279)		Balance, end of period	(8,453)		(8,706)		(8,453)		(8,706)
AB Holding Units held for Long-term Incentive Compensation Plans	AB Holding Units held for Long-term Incentive Compensation Plans							AB Holding Units held for Long-term Incentive Compensation Plans
Balance, beginning of period	Balance, beginning of period		(57,219)			(76,310)		Balance, beginning of period	(140,204)		(73,726)		(57,219)		(76,310)
Purchases of AB Holding Units to fund long-term compensation plans, net	Purchases of AB Holding Units to fund long-term compensation plans, net		(35,854)			(17,750)		Purchases of AB Holding Units to fund long-term compensation plans, net	(45,993)		(6,043)		(121,461)		(53,458)
(Issuance) retirement of AB Units, net			(71,013)			5,763
Retirement of AB Units, net								Retirement of AB Units, net	53,163		8,629		16,665		44,847
Long-term incentive compensation awards expense	Long-term incentive compensation awards expense		18,002			7,407		Long-term incentive compensation awards expense	6,518		8,321		34,025		22,996
Re-valuation of AB Holding Units held in rabbi trust	Re-valuation of AB Holding Units held in rabbi trust		2,277			(436)		Re-valuation of AB Holding Units held in rabbi trust	(4,392)		(1,500)		(2,918)		(2,409)
Other	Other		0			12		Other	—		—		—		15
Balance, end of period	Balance, end of period		(143,807)			(81,314)		Balance, end of period	(130,908)		(64,319)		(130,908)		(64,319)
Accumulated Other Comprehensive Income (Loss)	Accumulated Other Comprehensive Income (Loss)							Accumulated Other Comprehensive Income (Loss)
Balance, beginning of period	Balance, beginning of period		(94,203)			(113,004)		Balance, beginning of period	(98,790)		(127,359)		(94,203)		(113,004)

Foreign currency translation adjustment, net of tax	Foreign currency translation adjustment, net of tax		(7,116)			(21,323)		Foreign currency translation adjustment, net of tax	(9,349)		16,342		(14,351)		1,403
Changes in employee benefit related items, net of tax	Changes in employee benefit related items, net of tax		87			254		Changes in employee benefit related items, net of tax	328		329		743		913

Balance, end of period	Balance, end of period		(101,232)			(134,073)		Balance, end of period	(107,811)		(110,688)		(107,811)		(110,688)
Total Partners' Capital attributable to AB Unitholders	Total Partners' Capital attributable to AB Unitholders		4,049,162			3,925,851		Total Partners' Capital attributable to AB Unitholders	3,991,400		3,937,831		3,991,400		3,937,831

See Accompanying Notes to Condensed Consolidated Financial Statements.

Index

ALLIANCEBERNSTEIN L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020

Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	243,839	$	168,749	Net income	$	778,603	$	575,067

Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred sales commissions	Amortization of deferred sales commissions	7,899		5,526		Amortization of deferred sales commissions	24,866		19,582
Non-cash long-term incentive compensation expense	Non-cash long-term incentive compensation expense	18,144		7,591		Non-cash long-term incentive compensation expense	34,725		23,594
Depreciation and other amortization	Depreciation and other amortization	32,009		36,156		Depreciation and other amortization	97,239		107,910
Unrealized (gains) losses on investments		(175)		20,585
Unrealized losses on investments						Unrealized losses on investments	5,203		20,593
Unrealized losses on investments of consolidated company-sponsored investment funds	Unrealized losses on investments of consolidated company-sponsored investment funds	6,941		52,115		Unrealized losses on investments of consolidated company-sponsored investment funds	3,878		8,254
Other, net	Other, net	10,181		(1,324)		Other, net	13,799		(1,072)
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Decrease (increase) in securities, segregated	Decrease (increase) in securities, segregated	340,605		(917,696)		Decrease (increase) in securities, segregated	844,939		(774,447)
(Increase) in receivables	(Increase) in receivables	(117,622)		(615,055)		(Increase) in receivables	(423,059)		(1,555)
Decrease (increase) in investments	Decrease (increase) in investments	53,493		(17,557)		Decrease (increase) in investments	24,052		(8,037)
(Increase) decrease in investments of consolidated company-sponsored investment funds		(12,401)		85,418
Decrease in investments of consolidated company-sponsored investment funds						Decrease in investments of consolidated company-sponsored investment funds	22,505		344,574
(Increase) in deferred sales commissions	(Increase) in deferred sales commissions	(10,952)		(18,510)		(Increase) in deferred sales commissions	(36,805)		(46,681)
(Increase) decrease in right-of-use assets	(Increase) decrease in right-of-use assets	(15,979)		134		(Increase) decrease in right-of-use assets	(80,667)		1,845
(Increase) in other assets		(68,957)		(118,038)
(Increase) decrease in other assets						(Increase) decrease in other assets	(182,775)		40,130
Increase in other assets and liabilities of consolidated company-sponsored investment funds, net	Increase in other assets and liabilities of consolidated company-sponsored investment funds, net	3,681		54,129		Increase in other assets and liabilities of consolidated company-sponsored investment funds, net	1,421		4,958
(Decrease) increase in payables	(Decrease) increase in payables	(218,887)		1,492,200		(Decrease) increase in payables	(226,164)		982,957
(Decrease) in lease liabilities		(9,163)		(23,968)
(Decrease) increase in accounts payable and accrued expenses		(1,566)		4,663
Increase (Decrease) in lease liabilities						Increase (Decrease) in lease liabilities	4,103		(71,431)
Increase (decrease) in accounts payable and accrued expenses						Increase (decrease) in accounts payable and accrued expenses	35,107		(5,988)
Increase in accrued compensation and benefits	Increase in accrued compensation and benefits	66,909		70,792		Increase in accrued compensation and benefits	462,274		361,251
Net cash provided by operating activities	Net cash provided by operating activities	327,999		285,910		Net cash provided by operating activities	1,403,244		1,581,504

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:

Purchases of furniture, equipment and leasehold improvements	Purchases of furniture, equipment and leasehold improvements	(15,584)		(3,321)		Purchases of furniture, equipment and leasehold improvements	(52,074)		(12,357)

Acquisition of business, net of cash acquired	Acquisition of business, net of cash acquired	(3,795)		(11,473)		Acquisition of business, net of cash acquired	(3,793)		(13,552)
Net cash used in investing activities	Net cash used in investing activities	(19,379)		(14,794)		Net cash used in investing activities	(55,867)		(25,909)

Index


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
(Repayment) borrowings of debt, net		(50,000)		374,814

(Decrease) increase in overdrafts payable		(1,190)		85,395
Distributions to General Partner and Unitholders		(289,711)		(253,803)
(Redemptions) of non-controlling interest in consolidated company-sponsored investment funds, net		(13,500)		(75,091)
(Repayment) of debt, net						(Repayment) of debt, net	(285,000)		(260,000)

Capital contributions from (to) affiliates		6,096		(699)
Increase in overdrafts payable						Increase in overdrafts payable	24,923		2,640
Distributions to General Partner and Unitholders						Distributions to General Partner and Unitholders	(797,811)		(630,882)
Subscriptions (redemptions) of non-controlling interest in consolidated company-sponsored investment funds, net						Subscriptions (redemptions) of non-controlling interest in consolidated company-sponsored investment funds, net	13,239		(264,021)

Interest accretion, net of (payments) on contingent payment arrangements		796		793

Capital contributions to affiliates						Capital contributions to affiliates	(1,914)		(865)

Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units	Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units	1,914		147		Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units	3,402		147
Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net	Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net	(35,854)		(17,750)		Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net	(121,461)		(53,458)

Other	Other	(475)		(504)		Other	1,148		1,276
Net cash (used in) provided by financing activities		(381,924)		113,302
Net cash used in financing activities						Net cash used in financing activities	(1,163,474)		(1,205,163)

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(1,589)		(13,049)		Effect of exchange rate changes on cash and cash equivalents	(15,038)		1,415

Net (decrease) increase in cash and cash equivalents		(74,893)		371,369
Net increase in cash and cash equivalents						Net increase in cash and cash equivalents	168,865		351,847
Cash and cash equivalents as of beginning of the period	Cash and cash equivalents as of beginning of the period	1,073,906		691,171		Cash and cash equivalents as of beginning of the period	1,073,906		691,171
Cash and cash equivalents as of end of the period	Cash and cash equivalents as of end of the period	$	999,013	$	1,062,540	Cash and cash equivalents as of end of the period	$	1,242,771	$	1,043,018

Non-cash investing activities:	Non-cash investing activities:					Non-cash investing activities:
Fair value of assets acquired (less cash acquired of $2.8 million and $0.6 million, respectively)	Fair value of assets acquired (less cash acquired of $2.8 million and $0.6 million, respectively)	$	12,962	$	11,908	Fair value of assets acquired (less cash acquired of $2.8 million and $0.6 million, respectively)	$	13,235	$	18,389
Fair value of liabilities assumed	Fair value of liabilities assumed	$	1,642	$	435	Fair value of liabilities assumed	$	1,642	$	437

Non-cash financing activities:	Non-cash financing activities:					Non-cash financing activities:
Payables recorded under contingent payment arrangements	Payables recorded under contingent payment arrangements	$	7,525	$	0	Payables recorded under contingent payment arrangements	$	7,800	$	4,400

See Accompanying Notes to Condensed Consolidated Financial Statements.

Index

ALLIANCEBERNSTEIN L.P.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

~~March 31,~~September 30, 2021

(unaudited)

The words “we” and “our” refer collectively to AllianceBernstein L.P. and its subsidiaries (“AB”), or to their officers and employees. Similarly, the word “company” refers to AB. These statements should be read in conjunction with AB’s audited consolidated financial statements included in AB’s Form 10-K for the year ended December 31, 2020.

1. Business Description Organization and Basis of Presentation

Business Description

We provide diversified investment management, research and related services globally to a broad range of clients. Our principal services include:

• Institutional Services – servicing our institutional clients, including private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as Equitable Holdings, Inc. ("EQH") and its subsidiaries, by means of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles.

• Retail Services – servicing our retail clients, primarily by means of retail mutual funds sponsored by AB or an affiliated company, sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide and other investment vehicles.

• Private Wealth Management Services – servicing our private clients, including high-net-worth individuals and families, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles.

•Bernstein Research Services – servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options.

We also provide distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds we sponsor.

Our high-quality, in-depth research is the foundation of our business. Our research disciplines include economic, fundamental equity, fixed income and quantitative research. In addition, we have expertise in multi-asset strategies, wealth management, environmental, social and corporate governance ("ESG"), and alternative investments.

We provide a broad range of investment services with expertise in:

•Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities;

•Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies;

•Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity;

•Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds; and

•Some passive management, including index and enhanced index strategies.

Index

Organization

As of ~~March 31,~~September 30, 2021, EQH owned approximately ~~4.0%~~4.1% of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AllianceBernstein Holding L.P. (“AB Holding Units”). AllianceBernstein Corporation (an indirect wholly-owned subsidiary of EQH, “General Partner”) is the general partner of both AllianceBernstein Holding L.P. (“AB Holding”) and AB. AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1% general partnership interest in AB.

As of ~~March 31,~~September 30, 2021, the ownership structure of AB, including limited partnership units outstanding as well as the general partner's 1% interest, was as follows:


EQH and its subsidiaries	~~62.8~~63.2	%
AB Holding	~~36.5~~36.1
Unaffiliated holders	0.7
	100.0	%

Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate ~~64.3%~~64.7% economic interest in AB as of ~~March 31,~~September 30, 2021.

Basis of Presentation

The interim condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the interim results, have been made. The preparation of the condensed consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the interim reporting periods. Actual results could differ from those estimates. The condensed consolidated statement of financial condition as of December 31, 2020 was derived from audited financial statements. Certain disclosures included in the annual financial statements have been condensed or omitted from these financial statements as they are not required for interim financial statements under principles generally accepted in the United States of America ("GAAP") and the rules of the Securities and Exchange Commission.

Principles of Consolidation

The condensed consolidated financial statements include AB and its majority-owned and/or controlled subsidiaries, and the consolidated entities that are considered to be variable interest entities (“VIEs”) and voting interest entities (“VOEs”) in which AB has a controlling financial interest. Non-controlling interests on the condensed consolidated statements of financial condition include the portion of consolidated company-sponsored investment funds in which we do not have direct equity ownership. All significant inter-company transactions and balances among the consolidated entities have been eliminated.

Reclassifications

During 2021, prior period amounts previously presented as net issuance (repayment) of commercial paper, proceeds (repayment) of EQH facility and proceeds (repayment) of bank loans are now combined and presented as net repayments (borrowings) of debt in the condensed consolidated statements of cash flows to conform to the current period's presentation.

Subsequent Events

We have evaluated subsequent events through the date that these financial statements were filed with the Securities and Exchange Commission. See Note 18 Subsequent Events for further discussion.

Index

2. Significant Accounting Policies

Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20). The amendment modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. We adopted this standard prospectively on January 1, 2021. The adoption of this standard did not have a material impact on our financial condition or results of operations.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending the existing guidance. We adopted this standard prospectively on January 1, 2021. The adoption of this standard did not have a material impact on our financial condition or results of operations.

3. Revenue Recognition

Revenues for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 consisted of the following:


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
			2021		2020				2021		2020		2021		2020
			(in thousands)						(in thousands)
Subject to contracts with customers:	Subject to contracts with customers:							Subject to contracts with customers:
Investment advisory and services fees	Investment advisory and services fees							Investment advisory and services fees
Base fees	Base fees		$	687,691	$	613,587		Base fees	$	758,524	$	623,593	$	2,169,932	$	1,806,476
Performance-based fees	Performance-based fees		15,775		8,138			Performance-based fees	18,273		6,946		87,955		23,991
Bernstein research services	Bernstein research services		119,021		129,223			Bernstein research services	113,340		98,514		338,016		341,346
Distribution revenues	Distribution revenues							Distribution revenues
All-in-management fees	All-in-management fees		85,182		86,357			All-in-management fees	89,737		83,466		260,992		245,651
12b-1 fees	12b-1 fees		20,034		19,453			12b-1 fees	21,681		19,068		62,368		56,351
Other	Other		42,384		25,047			Other	59,194		33,159		150,390		84,647
Other revenues	Other revenues							Other revenues
Shareholder servicing fees	Shareholder servicing fees		21,695		20,843			Shareholder servicing fees	23,495		20,753		67,573		61,290
Other	Other		5,683		4,672			Other	3,526		5,477		12,142		15,939
			997,465		907,320				1,087,770		890,976		3,149,368		2,635,691
Not subject to contracts with customers:	Not subject to contracts with customers:							Not subject to contracts with customers:
Dividend and interest income, net of interest expense	Dividend and interest income, net of interest expense		7,540		11,146			Dividend and interest income, net of interest expense	7,834		7,603		23,298		28,006
Investment gains (losses)			1,928		(44,306)
Investment (losses) gains								Investment (losses) gains	(2,724)		1,106		3,385		(19,011)
Other revenues	Other revenues		333		(4)			Other revenues	(48)		353		869		957
			9,801		(33,164)				5,062		9,062		27,552		9,952
Total net revenues	Total net revenues		$	1,007,266	$	874,156		Total net revenues	$	1,092,832	$	900,038	$	3,176,920	$	2,645,643

4. Long-term Incentive Compensation Plans

We maintain several unfunded, non-qualified long-term incentive compensation plans, under which we grant annual awards to employees, generally in the fourth quarter, and to members of the Board of Directors of the General Partner, who are not employed by our company or by any of our affiliates (“Eligible Directors”).

We fund our restricted AB Holding Unit awards either by purchasing AB Holding Units on the open market or purchasing newly-issued AB Holding Units from AB Holding, and then keeping these AB Holding Units in a consolidated rabbi trust until delivering them or retiring them. In accordance with the Amended and Restated Agreement of Limited Partnership of AB (“AB Partnership Agreement”), when AB purchases newly-issued AB Holding Units from AB Holding, AB Holding is

Index

required to use the proceeds it receives from AB to purchase the equivalent number of newly-issued AB Units, thus increasing its percentage ownership interest in AB. AB Holding Units held in the consolidated rabbi trust are corporate assets in the name of the trust and are available to the general creditors of AB.

Repurchases of AB Holding Units for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 consisted of the following:


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
			2021		2020				2021		2020		2021		2020
			(in millions)						(in millions)
Total amount of AB Holding Units Purchased (1)	Total amount of AB Holding Units Purchased (1)		1.0		0.9			Total amount of AB Holding Units Purchased (1)	1.0		0.3		2.9		2.5
Total Cash Paid for AB Holding Units Purchased (1)	Total Cash Paid for AB Holding Units Purchased (1)		$	37.4	$	19.8		Total Cash Paid for AB Holding Units Purchased (1)	$	50.0	$	6.8	$	125.7	$	54.4
Open Market Purchases of AB Holding Units Purchased (2)	Open Market Purchases of AB Holding Units Purchased (2)		0.6		0.8			Open Market Purchases of AB Holding Units Purchased (2)	0.9		0.2		2.3		2.4
Total Cash Paid for Open Market Purchases of AB Holding Units (2)	Total Cash Paid for Open Market Purchases of AB Holding Units (2)		$	24.2	$	17.3		Total Cash Paid for Open Market Purchases of AB Holding Units (2)	$	44.9	$	6.7	$	103.7	$	51.8

(1) Purchased on a trade date basis.

(2) The remainder related to purchases of AB Holding Units from employees to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation award.

Purchases of AB Holding Units reflected on the condensed consolidated statements of cash flows are net of AB Holding Unit purchases by employees as part of a distribution reinvestment election.

Each quarter, we consider whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended ("Exchange Act"). A plan of this type allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed trading blackout periods or because it possesses material non-public information. Each broker we select has the authority under the terms and limitations specified in the plan to repurchase AB Holding Units on our behalf. Repurchases are subject to regulations promulgated by the SEC as well as certain price, market volume and timing constraints specified in the plan. The plan adopted during the ~~first~~third quarter of 2021 expired at the close of business on ~~April 28,~~October 27, 2021. We may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program and for other corporate purposes.

During the first ~~three~~nine months of 2021 and 2020, we awarded to employees and Eligible Directors ~~3.4~~3.6 million and ~~0.1~~0.5 million restricted AB Holding Unit awards, respectively. We used AB Holding Units repurchased during the applicable period and newly-issued AB Holding Units to fund these awards.

During the first ~~three~~nine months of 2021 and 2020, AB Holding issued 0.1 million and 5,182 AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of ~~$1.9~~$3.4 million and $0.1 million, respectively, received from award recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.

Index

5. Net Income per Unit

Basic net income per unit is derived by reducing net income for the 1% general partnership interest and dividing the remaining 99% by the basic weighted average number of limited partnership units outstanding for each period. Diluted net income per unit is derived by reducing net income for the 1% general partnership interest and dividing the remaining 99% by the total of the diluted weighted average number of limited partnership units outstanding for each period.


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
			2021		2020				2021		2020		2021		2020
			(in thousands, except per unit amounts)						(in thousands, except per unit amounts)
Net income attributable to AB Unitholders	Net income attributable to AB Unitholders		$	244,131	$	194,320		Net income attributable to AB Unitholders	$	264,695	$	207,976	$	776,396	$	579,617

Weighted average limited partnership units outstanding – basic	Weighted average limited partnership units outstanding – basic		272,332		270,498			Weighted average limited partnership units outstanding – basic	271,594		268,538		272,088		269,369
Dilutive effect of compensatory options to buy AB Holding Units	Dilutive effect of compensatory options to buy AB Holding Units		32		32			Dilutive effect of compensatory options to buy AB Holding Units	3		27		14		23
Weighted average limited partnership units outstanding – diluted	Weighted average limited partnership units outstanding – diluted		272,364		270,530			Weighted average limited partnership units outstanding – diluted	271,597		268,565		272,102		269,392
Basic net income per AB Unit	Basic net income per AB Unit		$	0.89	$	0.71		Basic net income per AB Unit	$	0.96	$	0.77	$	2.82	$	2.13
Diluted net income per AB Unit	Diluted net income per AB Unit		$	0.89	$	0.71		Diluted net income per AB Unit	$	0.96	$	0.77	$	2.82	$	2.13

~~Index~~

Three Months Ended March 31,
2021 2020
(amounts as shown)
Anti-dilutive options excluded from diluted net income 0 29,056


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
	(amounts as shown)
Anti-dilutive options excluded from diluted net income	—	29,056	—	29,056

6. Cash Distributions

AB is required to distribute all of its Available Cash Flow, as defined in the AB Partnership Agreement, to its Unitholders and to the General Partner. Available Cash Flow can be summarized as the cash flow received by AB from operations minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB for use in its business, or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow.

Typically, Available Cash Flow has been the adjusted diluted net income per unit for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. In future periods, management anticipates that Available Cash Flow will be based on adjusted diluted net income per unit, unless management determines, with the concurrence of the Board of Directors, that one or more adjustments that are made for adjusted net income should not be made with respect to the Available Cash Flow calculation.

On ~~April 29,~~October 28, 2021, the General Partner declared a distribution of ~~$0.88~~$0.96 per AB Unit, representing a distribution of Available Cash Flow for the three months ended ~~March 31,~~September 30, 2021. The General Partner, as a result of its 1% general partnership interest, is entitled to receive 1% of each distribution. The distribution is payable on ~~May 27,~~November 24, 2021 to holders of record on ~~May 10,~~November 8, 2021.

7. Cash and Securities Segregated Under Federal Regulations and Other Requirements

As of ~~March 31,~~September 30, 2021 and December 31, 2020, ~~$1.4~~$0.9 billion and $1.8 billion, respectively, of U.S. Treasury Bills were segregated in a special reserve bank custody account for the exclusive benefit of our brokerage customers under Rule 15c3-3 of the Exchange Act.

Index

8. Investments

Investments consist of:


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
		(in thousands)					(in thousands)

Equity securities:	Equity securities:					Equity securities:
Long-term incentive compensation-related	Long-term incentive compensation-related	$	28,645	$	34,351	Long-term incentive compensation-related	$	30,810	$	34,351
Seed capital	Seed capital	74,241		75,766		Seed capital	98,189		75,766
Other	Other	11,469		55,439		Other	5,163		55,439
Exchange-traded options	Exchange-traded options	4,156		7,527		Exchange-traded options	1,569		7,527
Investments in limited partnership hedge funds:	Investments in limited partnership hedge funds:					Investments in limited partnership hedge funds:
Long-term incentive compensation-related	Long-term incentive compensation-related	30,085		25,762		Long-term incentive compensation-related	31,387		25,762
Seed capital	Seed capital	17,363		16,646		Seed capital	21,536		16,646
Time deposits	Time deposits	18,233		18,602		Time deposits	19,054		18,602
Other	Other	15,466		19,282		Other	15,410		19,282
Total investments	Total investments	$	199,658	$	253,375	Total investments	$	223,118	$	253,375

Total investments related to long-term incentive compensation obligations of ~~$58.7~~$62.2 million and $60.1 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively, consist of company-sponsored mutual funds and hedge funds. For long-term incentive compensation awards granted before 2009, we typically made investments in company-sponsored mutual funds and hedge funds that were notionally elected by plan participants and maintained them (and continue to maintain them) in a consolidated rabbi trust or separate custodial account. The rabbi trust and custodial account enable us

~~Index~~

to hold such investments separate from our other assets for the purpose of settling our obligations to participants. The investments held in the rabbi trust and custodial account remain available to the general creditors of AB.

The underlying investments of hedge funds in which we invest include long and short positions in equity securities, fixed income securities (including various agency and non-agency asset-based securities), currencies, commodities and derivatives (including various swaps and forward contracts). These investments are valued at quoted market prices or, where quoted market prices are not available, are fair valued based on the pricing policies and procedures of the underlying funds.

We allocate seed capital to our investment teams to help develop new products and services for our clients. A portion of our seed capital trading investments are equity and fixed income products, primarily in the form of separately-managed account portfolios, U.S. mutual funds, Luxembourg funds, Japanese investment trust management funds or Delaware business trusts. We also may allocate seed capital to investments in private equity funds. ~~In regard to~~Regarding our seed capital investments, the amounts above reflect those funds in which we are not the primary beneficiary of a VIE or hold a controlling financial interest in a VOE. See Note 14, Consolidated Company-Sponsored Investment Funds, for a description of the seed capital investments that we consolidate. As of ~~March 31,~~September 30, 2021 and December 31, 2020, our total seed capital investments were ~~$327.1~~$291.0 million and $310.3 million, respectively. Seed capital investments in unconsolidated company-sponsored investment funds are valued using published net asset values or non-published net asset values if they are not listed on an active exchange but have net asset values that are comparable to funds with published net asset values and have no redemption restrictions.

In addition, we also have long positions in corporate equities and long exchange-traded options traded through our options desk.

Index

The portion of unrealized gains (losses) related to equity securities, as defined by ASC 321-10, held as of ~~March 31,~~September 30, 2021 and 2020 were as follows:

Three Months Ended March 31,
2021 2020
(in thousands)
Net gains (losses) recognized during the period $ 4,887 $ (21,986)
Less: net gains (losses) recognized during the period on equity securities sold during the period 4,565 (1,395)
Unrealized gains (losses) recognized during the period on equity securities held $ 322 $ (20,591)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Net gains recognized during the period	$	1,853	$	12,904	$	14,459	$	5,304
Less: net gains recognized during the period on equity securities sold during the period	2,902		18,929		19,623		25,005
Unrealized (losses) recognized during the period on equity securities held	$	(1,049)	$	(6,025)	$	(5,164)	$	(19,701)

9. Derivative Instruments

See Note 14, Consolidated Company-Sponsored Investment Funds, for disclosure of derivative instruments held by our consolidated company-sponsored investment funds.

We enter ~~into~~ various futures, forwards, options and swaps to economically hedge certain seed capital investments. Also, we have currency forwards that help us to economically hedge certain balance sheet exposures. In addition, our options desk trades long and short exchange-traded equity options. We do not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives and Hedging.

~~Index~~

The notional value and fair value as of ~~March 31,~~September 30, 2021 and December 31, 2020 for derivative instruments (excluding derivative instruments relating to our options desk trading activities discussed below) not designated as hedging instruments were as follows:


				Fair Value							Fair Value
		Notional Value		Derivative Assets		Derivative Liabilities			Notional Value		Derivative Assets		Derivative Liabilities
		(in thousands)							(in thousands)
March 31, 2021:
September 30, 2021:								September 30, 2021:
Exchange-traded futures	Exchange-traded futures	$	146,700	$	1,962	$	678	Exchange-traded futures	$	115,197	$	2,280	$	448
Currency forwards	Currency forwards	51,703		8,548		8,042		Currency forwards	48,080		7,906		7,312
Interest rate swaps	Interest rate swaps	60,997		1,670		2,425		Interest rate swaps	13,483		358		593
Credit default swaps	Credit default swaps	178,035		11,369		9,430		Credit default swaps	121,158		6,754		6,645
Total return swaps	Total return swaps	53,817		31		800		Total return swaps	26,656		861		142
Option swaps	Option swaps	50,000		0		329		Option swaps	50,000		—		136
Total derivatives	Total derivatives	$	541,252	$	23,580	$	21,704	Total derivatives	$	374,574	$	18,159	$	15,276

December 31, 2020:	December 31, 2020:							December 31, 2020:
Exchange-traded futures	Exchange-traded futures	$	142,886	$	118	$	1,834	Exchange-traded futures	$	142,886	$	118	$	1,834
Currency forwards	Currency forwards	63,906		8,576		8,451		Currency forwards	63,906		8,576		8,451
Interest rate swaps	Interest rate swaps	60,997		2,043		2,955		Interest rate swaps	60,997		2,043		2,955
Credit default swaps	Credit default swaps	167,649		10,910		13,304		Credit default swaps	167,649		10,910		13,304
Total return swaps	Total return swaps	52,061		94		1,847		Total return swaps	52,061		94		1,847
Option swaps	Option swaps	2,486		0		2,146		Option swaps	2,486		—		2,146
Total derivatives	Total derivatives	$	489,985	$	21,741	$	30,537	Total derivatives	$	489,985	$	21,741	$	30,537

As of ~~March 31,~~September 30, 2021 and December 31, 2020, the derivative assets and liabilities are included in both receivables and payables to brokers and dealers on our condensed consolidated statements of financial condition.

Index

The gains and losses for derivative instruments (excluding our options desk trading activities discussed below) for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 recognized in investment gains (losses) in the condensed consolidated statements of income were as follows:


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
									(in thousands)
Exchange-traded futures	Exchange-traded futures		$	1,135		$	1,006	Exchange-traded futures	$	2,186	$	(2,753)	$	(1,561)	$	(7,565)
Currency forwards	Currency forwards		1,181			658		Currency forwards	512		(1,031)		1,339		(585)
Interest rate swaps	Interest rate swaps		88			(612)		Interest rate swaps	(179)		15		(202)		(372)
Credit default swaps	Credit default swaps		(522)			12,101		Credit default swaps	(91)		(2,298)		(2,327)		5,492
Total return swaps	Total return swaps		(907)			15,115		Total return swaps	(611)		(6,840)		(4,498)		(10,691)
Option swaps	Option swaps		1,361			1,298		Option swaps	78		(1,183)		66		(1,716)
Net gains on derivative instruments			$	2,336		$	29,566
Net gains (losses) on derivative instruments								Net gains (losses) on derivative instruments	$	1,895	$	(14,090)	$	(7,183)	$	(15,437)

We may be exposed to credit-related losses in the event of non-performance by counterparties to derivative financial instruments. We minimize our counterparty exposure through a credit review and approval process. In addition, we have executed various collateral arrangements with counterparties to the over-the-counter derivative transactions that require both pledging and accepting collateral in the form of cash. As of ~~March 31,~~September 30, 2021 and December 31, 2020, we held ~~$3.9~~$2.7 million and $0.4 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in payables to brokers and dealers in our condensed consolidated statements of financial condition.

Although notional amount typically is utilized as the ~~most commonly used~~ measure of volume in the derivatives market, it is not used as a measure of credit risk. Generally, the current credit exposure of our derivative contracts is limited to the net positive estimated fair value of derivative contracts at the reporting date after taking into consideration the existence of netting

~~Index~~

agreements and any collateral received. A derivative with positive value (a derivative asset) indicates existence of credit risk because the counterparty would owe us if the contract were closed. Alternatively, a derivative contract with negative value (a derivative liability) indicates we would owe money to the counterparty if the contract were closed. Generally, if there is more than one derivative transaction with a single counterparty, a master netting arrangement exists with respect to derivative transactions with that counterparty to provide for aggregate net settlement.

Certain of our standardized contracts for over-the-counter derivative transactions (“ISDA Master Agreements”) contain credit risk related contingent provisions pertaining to each counterparty’s credit rating. In some ISDA Master Agreements, if the counterparty’s credit rating, or in some agreements, our assets under management (“AUM”), falls below a specified threshold, either a default or a termination event permitting us or the counterparty to terminate the ISDA Master Agreement would be triggered. In all agreements that provide for collateralization, various levels of collateralization of net liability positions are applicable, depending on the credit rating of the counterparty. As of ~~March 31,~~September 30, 2021 and December 31, 2020, we delivered ~~$3.3~~$3.4 million and $6.4 million, respectively, of cash collateral into brokerage accounts. We report this cash collateral in cash and cash equivalents in our condensed consolidated statements of financial condition.

As of ~~March 31,~~September 30, 2021 and December 31, 2020, we held ~~$4.2~~$1.6 million and $7.5 million, respectively, of long exchange-traded equity options, which are included in other investments on our condensed consolidated statements of financial condition. In addition, as of ~~March 31,~~September 30, 2021 and December 31, 2020, we held ~~$1.3~~$0.7 million and $12.5 million, respectively, of short exchange-traded equity options, which are included in securities sold not yet purchased on our condensed consolidated statements of financial condition. Our options desk provides our clients with equity derivative strategies and execution for exchange-traded options on single stocks, exchange-traded funds and indices. While predominately agency-based, the options desk may commit capital to facilitate a client’s transaction. Our options desk hedges the risks associated with this activity by taking offsetting positions in equities. For the three and nine months ended ~~March 31,~~September 30, 2021, ~~and 2020,~~ we recognized losses of $0.5 million and gains of ~~$4.8 million and $18.4~~$2.6 million, respectively, on equity options activity. For the three and nine months ended September 30, 2020, we recognized losses of $4.4 million and $4.5 million, respectively, on equity option activity. These gains and losses are recognized in investment gains (losses) in the condensed consolidated statements of income.

Index

10. Offsetting Assets and Liabilities

See Note 14, Consolidated Company-Sponsored Investment Funds, for disclosure of offsetting assets and liabilities of our consolidated company-sponsored investment funds.

Offsetting of assets as of ~~March 31,~~September 30, 2021 and December 31, 2020 was as follows:


		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Received		Net Amount			Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Received		Net Amount
		(in thousands)													(in thousands)
March 31, 2021:
September 30, 2021:														September 30, 2021:
Securities borrowed	Securities borrowed	$	24,294	$	0	$	24,294	$	(19,526)	$	0	$	4,768	Securities borrowed	$	15,384	$	—	$	15,384	$	(14,161)	$	—	$	1,223
Derivatives	Derivatives	$	23,580	$	0	$	23,580	$	0	$	(3,890)	$	19,690	Derivatives	$	18,159	$	—	$	18,159	$	—	$	(2,712)	$	15,447
Long exchange-traded options	Long exchange-traded options	$	4,156	$	0	$	4,156	$	0	$	0	$	4,156	Long exchange-traded options	$	1,569	$	—	$	1,569	$	—	$	—	$	1,569
December 31, 2020:	December 31, 2020:													December 31, 2020:
Securities borrowed	Securities borrowed	$	7,808	$	0	$	7,808	$	(7,344)	$	0	$	464	Securities borrowed	$	7,808	$	—	$	7,808	$	(7,344)	$	—	$	464
Derivatives	Derivatives	$	21,741	$	0	$	21,741	$	0	$	(380)	$	21,361	Derivatives	$	21,741	$	—	$	21,741	$	—	$	(380)	$	21,361
Long exchange-traded options	Long exchange-traded options	$	7,527	$	0	$	7,527	$	0	$	0	$	7,527	Long exchange-traded options	$	7,527	$	—	$	7,527	$	—	$	—	$	7,527

~~Index~~

Offsetting of liabilities as of ~~March 31,~~September 30, 2021 and December 31, 2020 was as follows:


		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Liabilities Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Pledged		Net Amount			Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Liabilities Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Pledged		Net Amount
		(in thousands)													(in thousands)
March 31, 2021:
September 30, 2021:														September 30, 2021:

Derivatives	Derivatives	$	21,704	$	0	$	21,704	$	0	$	(3,338)	$	18,366	Derivatives	$	15,276	$	—	$	15,276	$	—	$	(3,354)	$	11,922
Short exchange-traded options	Short exchange-traded options	$	1,270	$	0	$	1,270	$	0	$	0	$	1,270	Short exchange-traded options	$	701	$	—	$	701	$	—	$	—	$	701
December 31, 2020:	December 31, 2020:													December 31, 2020:

Derivatives	Derivatives	$	30,537	$	0	$	30,537	$	0	$	(6,374)	$	24,163	Derivatives	$	30,537	$	—	$	30,537	$	—	$	(6,374)	$	24,163
Short exchange-traded options	Short exchange-traded options	$	12,486	$	0	$	12,486	$	0	$	0	$	12,486	Short exchange-traded options	$	12,486	$	—	$	12,486	$	—	$	—	$	12,486

Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty.

Index

11. Fair Value

See Note 14, Consolidated Company-Sponsored Investment Funds, for disclosure of fair value of our consolidated company-sponsored investment funds.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The three broad levels of fair value hierarchy are as follows:

• Level 1 – Quoted prices in active markets are available for identical assets or liabilities as of the reported date.

• Level 2 – Quoted prices in markets that are not active or other pricing inputs that are either directly or indirectly observable as of the reported date.

• Level 3 – Prices or valuation techniques that are both significant to the fair value measurement and unobservable as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Valuation of our financial instruments by pricing observability levels as of ~~March 31,~~September 30, 2021 and December 31, 2020 was as follows (in thousands):


		Level 1		Level 2		Level 3		NAV Expedient(1)		Other		Total			Level 1		Level 2		Level 3		NAV Expedient(1)		Other		Total
March 31, 2021:
September 30, 2021:														September 30, 2021:
Money markets	Money markets	$	163,018	$	0	$	0	$	—	$	—	$	163,018	Money markets	$	152,335	$	—	$	—	$	—	$	—	$	152,335
Securities segregated (U.S. Treasury Bills)	Securities segregated (U.S. Treasury Bills)	0		1,412,873		0		—		—		1,412,873		Securities segregated (U.S. Treasury Bills)	—		907,999		—		—		—		907,999
Derivatives	Derivatives	1,962		21,618		0		—		—		23,580		Derivatives	2,280		15,879		—		—		—		18,159
Investments:	Investments:													Investments:

Equity securities	Equity securities	96,524		17,548		124		159		—		114,355		Equity securities	116,131		17,748		127		156		—		134,162
Long exchange-traded options	Long exchange-traded options	4,156		0		0		—		—		4,156		Long exchange-traded options	1,569		—		—		—		—		1,569
Limited partnership hedge funds(2)	Limited partnership hedge funds(2)	—		—		—		—		47,448		47,448		Limited partnership hedge funds(2)	—		—		—		—		52,923		52,923

Time deposits(3)	Time deposits(3)	—		—		—		—		18,233		18,233		Time deposits(3)	—		—		—		—		19,054		19,054
Other investments	Other investments	7,443		—		—		—		8,023		15,466		Other investments	8,137		—		—		—		7,273		15,410
Total investments	Total investments	108,123		17,548		124		159		73,704		199,658		Total investments	125,837		17,748		127		156		79,250		223,118
Total assets measured at fair value	Total assets measured at fair value	$	273,103	$	1,452,039	$	124	$	159	$	73,704	$	1,799,129	Total assets measured at fair value	$	280,452	$	941,626	$	127	$	156	$	79,250	$	1,301,611

Securities sold not yet purchased:	Securities sold not yet purchased:													Securities sold not yet purchased:
Short equities – corporate	Short equities – corporate	$	7,037	$	—	$	0	$	—	$	—	$	7,037	Short equities – corporate	$	1,881	$	—	$	—	$	—	$	—	$	1,881
Short exchange-traded options	Short exchange-traded options	1,270		0		0		—		—		1,270		Short exchange-traded options	701		—		—		—		—		701
Derivatives	Derivatives	678		21,026		0		—		—		21,704		Derivatives	448		14,828		—		—		—		15,276
Contingent payment arrangements	Contingent payment arrangements	0		0		36,073		—		—		36,073		Contingent payment arrangements	—		—		38,023		—		—		38,023
Total liabilities measured at fair value	Total liabilities measured at fair value	$	8,985	$	21,026	$	36,073	$	—	$	—	$	66,084	Total liabilities measured at fair value	$	3,030	$	14,828	$	38,023	$	—	$	—	$	55,881

Index


		Level 1		Level 2		Level 3		NAV Expedient(1)		Other		Total			Level 1		Level 2		Level 3		NAV Expedient(1)		Other		Total
December 31, 2020:	December 31, 2020:													December 31, 2020:
Money markets	Money markets	$	130,675	$	0	$	0	$	—	$	—	$	130,675	Money markets	$	130,675	$	—	$	—	$	—	$	—	$	130,675
Securities segregated (U.S. Treasury Bills)	Securities segregated (U.S. Treasury Bills)	0		1,752,906		0		—		—		1,752,906		Securities segregated (U.S. Treasury Bills)	—		1,752,906		—		—		—		1,752,906
Derivatives	Derivatives	118		21,623		0		—		—		21,741		Derivatives	118		21,623		—		—		—		21,741
Investments:	Investments:													Investments:
Equity securities	Equity securities	147,705		17,565		125		161		—		165,556		Equity securities	147,705		17,565		125		161		—		165,556
Long exchange-traded options	Long exchange-traded options	7,527		0		0		—		—		7,527		Long exchange-traded options	7,527		—		—		—		—		7,527
Limited partnership hedge funds(2)	Limited partnership hedge funds(2)	—		—		—		—		42,408		42,408		Limited partnership hedge funds(2)	—		—		—		—		42,408		42,408

Time deposits(3)	Time deposits(3)	—		—		—		—		18,602		18,602		Time deposits(3)	—		—		—		—		18,602		18,602
Other investments	Other investments	7,011		—		—		—		12,271		19,282		Other investments	7,011		—		—		—		12,271		19,282
Total investments	Total investments	162,243		17,565		125		161		73,281		253,375		Total investments	162,243		17,565		125		161		73,281		253,375
Total assets measured at fair value	Total assets measured at fair value	$	293,036	$	1,792,094	$	125	$	161	$	73,281	$	2,158,697	Total assets measured at fair value	$	293,036	$	1,792,094	$	125	$	161	$	73,281	$	2,158,697

Securities sold not yet purchased:	Securities sold not yet purchased:													Securities sold not yet purchased:
Short equities – corporate	Short equities – corporate	$	5,305	$	0	$	0	$	—	$	—	$	5,305	Short equities – corporate	$	5,305	$	—	$	—	$	—	$	—	$	5,305
Short exchange-traded options	Short exchange-traded options	12,486		0		0		—		—		12,486		Short exchange-traded options	12,486		—		—		—		—		12,486
Derivatives	Derivatives	1,834		28,703		0		—		—		30,537		Derivatives	1,834		28,703		—		—		—		30,537
Contingent payment arrangements	Contingent payment arrangements	0		0		27,750		—		—		27,750		Contingent payment arrangements	—		—		27,750		—		—		27,750
Total liabilities measured at fair value	Total liabilities measured at fair value	$	19,625	$	28,703	$	27,750	$	—	$	—	$	76,078	Total liabilities measured at fair value	$	19,625	$	28,703	$	27,750	$	—	$	—	$	76,078

(1) Investments measured at fair value using NAV (or its equivalent) as a practical expedient.

(2) Investments in equity method investees that are not measured at fair value in accordance with GAAP.

(3) Investments carried at amortized cost that are not measured at fair value in accordance with GAAP.

Other investments include (i) an investment in a software publishing company that does not have a readily available fair value ($2.2 million and $2.1 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively), (ii) investment in a start-up company that does not have a readily available fair value (this investment was $0.3 million as of both ~~March 31,~~September 30, 2021 and December 31, 2020), (iii) investments in equity method investees that are not measured at fair value in accordance with GAAP ($~~2.3~~2.0 million and $6.5 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively), and (iv) broker dealer exchange memberships that are not measured at fair value in accordance with GAAP ($~~3.3~~2.7 million and $3.3 million as of ~~both March 31,~~September 30, 2021 and December 31, ~~2020)~~2020, respectively).

We provide below a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy:

• Money markets: We invest excess cash in various money market funds that are valued based on quoted prices in active markets; these are included in Level 1 of the valuation hierarchy.

• Treasury Bills: We hold U.S. Treasury Bills, which are primarily segregated in a special reserve bank custody account as required by Rule 15c3-3 of the Exchange Act. These securities are valued based on quoted yields in secondary markets and are included in Level 2 of the valuation hierarchy.

• Equity securities: Our equity securities consist principally of company-sponsored mutual funds with NAVs and various separately-managed portfolios consisting primarily of equity and fixed income mutual funds with quoted prices in active markets, which are included in Level 1 of the valuation hierarchy. In addition, some securities are valued based on observable inputs from recognized pricing vendors, which are included in Level 2 of the valuation hierarchy.

• Derivatives: We hold exchange-traded futures with counterparties that are included in Level 1 of the valuation hierarchy. In addition, we also hold currency forward contracts, interest rate swaps, credit default swaps, option swaps

Index

and total return swaps with counterparties that are valued based on observable inputs from recognized pricing vendors, which are included in Level 2 of the valuation hierarchy.

• Options: We hold long exchange-traded options that are included in Level 1 of the valuation hierarchy.

• Securities sold not yet purchased: Securities sold not yet purchased, primarily reflecting short positions in equities and exchange-traded options, are included in Level 1 of the valuation hierarchy.

• Contingent payment arrangements: Contingent payment arrangements relate to contingent payment liabilities associated with various acquisitions. At each reporting date, we estimate the fair values of the contingent consideration expected to be paid based upon probability-weighted AUM and revenue projections, using unobservable market data inputs, which are included in Level 3 of the valuation hierarchy.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021 there were 0no transfers between Level 2 and Level 3 securities.

The change in carrying value associated with Level 3 financial instruments carried at fair value, classified as equity securities, is as follows:


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
			2021		2020				2021		2020		2021		2020
			(in thousands)						(in thousands)
Balance as of beginning of period	Balance as of beginning of period		$	125	$	119		Balance as of beginning of period	$	126	$	114	$	125	$	119
Purchases	Purchases		0		0			Purchases	—		—		—		—
Sales	Sales		0		0			Sales	—		—		—		—
Realized gains (losses), net	Realized gains (losses), net		0		0			Realized gains (losses), net	—		—		—		—
Unrealized gains (losses), net	Unrealized gains (losses), net		(1)		(1)			Unrealized gains (losses), net	1		7		2		2
Balance as of end of period	Balance as of end of period		$	124	$	118		Balance as of end of period	$	127	$	121	$	127	$	121

Realized and unrealized gains and losses on Level 3 financial instruments are recorded in investment gains and losses in the condensed consolidated statements of income.

As part of acquisitions made by the Company, we may enter into contingent consideration arrangements as part of the purchase price. The change in carrying value associated with Level 3 financial instruments carried at fair value, classified as contingent payment arrangements, is as follows:


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
			2021		2020				2021		2020		2021		2020
			(in thousands)						(in thousands)
Balance as of beginning of period	Balance as of beginning of period		$	27,750	$	22,911		Balance as of beginning of period	$	37,184	$	28,910	$	27,750	$	22,911
Addition	Addition		7,526		0			Addition	—		—		7,800		4,400
Accretion	Accretion		797		793			Accretion	839		813		2,473		2,412

Payments	Payments		0		0			Payments	—		—		—		—
Balance as of end of period	Balance as of end of period		$	36,073	$	23,704		Balance as of end of period	$	38,023	$	29,723	$	38,023	$	29,723

The liabilities were valued using expected revenue growth rates and discount rates. As of ~~March 31,~~September 30, 2021, the expected revenue growth rates range from 2.0% to ~~135.6%~~83.9%, with a weighted average of ~~9.0%~~13.0%, calculated using cumulative revenues and range of revenue growth rates (excluding revenue growth from additional AUM contributed ~~from existing clients)~~in year of acquisition). The discount rates ranged from 1.9% to ~~20.0%~~10.4%, with a weighted average of ~~10.8%~~6.6%, calculated using total contingent liabilities and range of discount rates. As of ~~March 31,~~September 30, 2020 the expected revenue growth rates ranged from 0.7% to 50.0%, with a weighted average of 4.9%, calculated using cumulative revenues and a range of revenue growth ~~rates.~~rates (excluding revenue growth from additional AUM contributed from existing clients). The discount rates ranged from ~~3.0%~~1.9% to ~~10.0%~~10.4%, with a weighted average of ~~9.3%~~8.0%, calculated using total contingent liabilities and range of discount rates.

Index

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We did not have any material assets or liabilities that were measured at fair value for impairment on a nonrecurring basis during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 or during the year ended December 31, 2020.

12. Commitments and Contingencies

Legal Proceedings

With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we can determine an estimate of the possible loss or range of loss in excess of amounts already accrued, if any, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages. Such is also the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope. In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss.

AB may be involved in various matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that we could incur losses pertaining to these matters, but we cannot currently estimate any such losses.

Management, after consultation with legal counsel, currently believes that the outcome of any individual matter that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations, financial condition or liquidity. However, any inquiry, proceeding or litigation has an element of uncertainty; management cannot determine whether further developments relating to any individual matter that is pending or threatened, or all of them combined, will have a material adverse effect on our results of operation, financial condition or liquidity in any future reporting period.

13. Leases

We lease office space, furniture and office equipment under various operating and financing leases. Our current leases have remaining lease terms of one year to 15 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. Since 2010, we have sub-leased over 1000000 square feet of office space.

Leases included in the condensed consolidated statement of financial condition as of ~~March 31,~~September 30, 2021 and December 31, 2020 were as follows:


		Classification	March 31, 2021		December 31, 2020			Classification	September 30, 2021		December 31, 2020
			(in thousands)						(in thousands)
Operating Leases	Operating Leases						Operating Leases
Operating lease right-of-use assets	Operating lease right-of-use assets	Right-of-use assets	$	407,608	$	416,007	Operating lease right-of-use assets	Right-of-use assets	$	428,268	$	416,007
Operating lease liabilities	Operating lease liabilities	Lease liabilities	490,121		503,174		Operating lease liabilities	Lease liabilities	500,821		503,174

Finance Leases	Finance Leases						Finance Leases
Property and equipment, gross	Property and equipment, gross	Right-of-use assets	7,329		5,167		Property and equipment, gross	Right-of-use assets	8,005		5,167
Amortization of right-of-use assets	Amortization of right-of-use assets	Right-of-use assets	(2,098)		(2,719)		Amortization of right-of-use assets	Right-of-use assets	(2,327)		(2,719)
Property and equipment, net	Property and equipment, net		5,231		2,448		Property and equipment, net		5,678		2,448
Finance lease liabilities	Finance lease liabilities	Lease liabilities	5,235		2,375		Finance lease liabilities	Lease liabilities	5,742		2,375

Index

The components of lease expense included in the condensed consolidated statement of income as of ~~March 31,~~September 30, 2021 and ~~March 31,~~September 30, 2020 were as follows:


			Three Months Ended March 31,							Three Months Ended September 30,			Nine Months Ended September 30,
		Classification			2021		2020			Classification	2021		2020		2021		2020
				(in thousands)							(in thousands)
Operating lease cost	Operating lease cost	General and administrative			$	24,418	$	23,004	Operating lease cost	General and administrative	$	23,992	$	22,104	$	73,039	$	67,519
Financing lease cost:	Financing lease cost:								Financing lease cost:
Amortization of right-of-use assets	Amortization of right-of-use assets	General and administrative			501		477		Amortization of right-of-use assets	General and administrative	631		426		1,611		1,329
Interest on lease liabilities	Interest on lease liabilities	Interest expense			22		26		Interest on lease liabilities	Interest expense	24		20		67		69
Total finance lease cost	Total finance lease cost				523		503		Total finance lease cost		655		446		1,678		1,398
Variable lease cost (1)	Variable lease cost (1)	General and administrative			9,546		9,477		Variable lease cost (1)	General and administrative	9,763		9,342		29,653		28,652
Sublease income	Sublease income	General and administrative			(9,807)		(9,615)		Sublease income	General and administrative	(9,550)		(9,579)		(28,863)		(28,820)
Net lease cost	Net lease cost				$	24,680	$	23,369	Net lease cost		$	24,860	$	22,313	$	75,507	$	68,749

(1) Variable lease expense includes operating expenses, real estate taxes and employee parking.

The sub-lease income represents all revenues received from sub-tenants. It is primarily fixed base rental payments combined with variable reimbursements such as operating expenses, real estate taxes and employee parking. We derive most of our sub-tenant income from our New York metro sub-tenant agreements. Sub-tenant income related to base rent is recorded on a straight-line basis.

Maturities of lease liabilities were as follows:


		Operating Leases		Financing Leases		Total			Operating Leases		Financing Leases		Total
Year ending December 31,	Year ending December 31,	(in thousands)						Year ending December 31,	(in thousands)
2021 (excluding the three months ended March 31, 2021)		$	82,594	$	1,363	$	83,957
2021 (excluding the nine months ended September 30, 2021)								2021 (excluding the nine months ended September 30, 2021)	$	24,205	$	523	$	24,728
2022	2022	100,370		1,551		101,921		2022	103,005		2,003		105,008
2023	2023	93,299		1,289		94,588		2023	95,398		1,740		97,138
2024	2024	90,283		722		91,005		2024	98,179		896		99,075
2025	2025	25,430		426		25,856		2025	32,563		599		33,162
Thereafter	Thereafter	149,885		24		149,909		Thereafter	198,781		111		198,892
Total lease payments	Total lease payments	541,861		5,375		547,236		Total lease payments	552,131		5,872		558,003
Less interest	Less interest	(51,740)		(140)				Less interest	(51,310)		(130)
Present value of lease liabilities	Present value of lease liabilities	$	490,121	$	5,235			Present value of lease liabilities	$	500,821	$	5,742

We have signed a lease which commences in 2024, relating to approximately 166,000 square feet of space in New York City. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 20-year lease term is approximately $393.0 million.


Lease term and discount rate:
Weighted average remaining lease term (years):
Operating leases	~~7.23~~7.60
Finance leases	~~3.52~~3.31
Weighted average discount rate:
Operating leases	~~3.07~~2.81	%
Finance leases	~~1.75~~1.54	%

Index

Supplemental cash flow information related to leases was as follows:


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
		(in thousands)					(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	Operating cash flows used for operating leases	$	27,970	$	29,698	Operating cash flows used for operating leases	$	87,654	$	86,452
Operating cash flows used for financing leases	Operating cash flows used for financing leases	22		26		Operating cash flows used for financing leases	67		69
Financing cash flows from finance leases		424		504
Financing cash flows used for finance leases						Financing cash flows used for finance leases	1,473		1,418
Right-of-use assets obtained in exchange for lease obligations(1):	Right-of-use assets obtained in exchange for lease obligations(1):					Right-of-use assets obtained in exchange for lease obligations(1):
Operating leases ~~(2)~~	Operating leases ~~(2)~~	12,161		0		Operating leases ~~(2)~~	74,305		2,369
Finance leases	Finance leases	3,283		1,695		Finance leases	4,840		1,695

(1) Represents supplemental non-cash ~~activity and, accordingly, is not reflected in the consolidated statements of cash flows.~~

~~(2)~~ ~~Represents net non-cash activity of new~~information on lease ~~obligations, extensions and reductions of existing lease obligations.~~liabilities arising from obtaining right-of-use assets.

14. Consolidated Company-Sponsored Investment Funds

We regularly provide seed capital to new company-sponsored investment funds. As such, we may consolidate or de-consolidate a variety of company-sponsored investment funds each quarter. Due to the similarity of risks related to our involvement with each company-sponsored investment fund, disclosures required under the VIE model are aggregated, such as disclosures regarding the carrying amount and classification of assets.

We are not required to provide financial support to company-sponsored investment funds, and only the assets of such funds are available to settle each fund's own liabilities. Our exposure to loss regarding consolidated company-sponsored investment funds is limited to our investment in, and our management fee earned from, such funds. Equity and debt holders of such funds have no recourse to AB’s assets or to the general credit of AB.

The balances of consolidated VIEs and VOEs included in our condensed consolidated statements of financial condition were as follows:


		March 31, 2021						December 31, 2020							September 30, 2021						December 31, 2020
		(in thousands)													(in thousands)
		VIEs		VOEs		Total		VIEs		VOEs		Total			VIEs		VOEs		Total		VIEs		VOEs		Total
Cash and cash equivalents	Cash and cash equivalents	$	35,084	$	3,477	$	38,561	$	36,370	$	136	$	36,506	Cash and cash equivalents	$	32,904	$	—	$	32,904	$	36,370	$	136	$	36,506
Investments	Investments	247,581		60,462		308,043		242,541		60,041		302,582		Investments	276,199		—		276,199		242,541		60,041		302,582
Other assets	Other assets	6,869		13,605		20,474		4,859		7,385		12,244		Other assets	12,797		—		12,797		4,859		7,385		12,244
Total assets	Total assets	$	289,534	$	77,544	$	367,078	$	283,770	$	67,562	$	351,332	Total assets	$	321,900	$	—	$	321,900	$	283,770	$	67,562	$	351,332

Liabilities	Liabilities	$	13,922	$	28,609	$	42,531	$	7,741	$	22,879	$	30,620	Liabilities	$	32,594	$	—	$	32,594	$	7,741	$	22,879	$	30,620
Redeemable non-controlling interest	Redeemable non-controlling interest	64,313		24,254		88,567		82,753		19,606		102,359		Redeemable non-controlling interest	117,804		—		117,804		82,753		19,606		102,359
Partners' capital attributable to AB Unitholders	Partners' capital attributable to AB Unitholders	211,299		24,681		235,980		193,276		25,077		218,353		Partners' capital attributable to AB Unitholders	171,502		—		171,502		193,276		25,077		218,353
Total liabilities, redeemable non-controlling interest and partners' capital	Total liabilities, redeemable non-controlling interest and partners' capital	$	289,534	$	77,544	$	367,078	$	283,770	$	67,562	$	351,332	Total liabilities, redeemable non-controlling interest and partners' capital	$	321,900	$	—	$	321,900	$	283,770	$	67,562	$	351,332

During the ~~first~~third quarter of 2021, we deconsolidated ~~one~~1 fund in which we had a seed investment of approximately ~~$4.1~~$3.6 million as of December 31, 2020 due to no longer having a controlling financial interest.

Index

Fair Value

Cash and cash equivalents include cash on hand, demand deposits, overnight commercial paper and highly liquid investments with original maturities of three months or less. Due to the short-term nature of these instruments, the recorded value has been determined to approximate fair value.

Valuation of consolidated company-sponsored investment funds' financial instruments by pricing observability levels as of ~~March 31,~~September 30, 2021 and December 31, 2020 was as follows (in thousands):


		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
March 31, 2021:
September 30, 2021:										September 30, 2021:
Investments - VIEs	Investments - VIEs	$	51,869	$	195,206	$	506	$	247,581	Investments - VIEs	$	61,230	$	214,969	$	—	$	276,199
Investments - VOEs		301		59,950		211		60,462

Derivatives - VIEs	Derivatives - VIEs	515		2,389		0		2,904		Derivatives - VIEs	804		3,677		—		4,481
Derivatives - VOEs		0		2,395		0		2,395

Total assets measured at fair value	Total assets measured at fair value	$	52,685	$	259,940	$	717	$	313,342	Total assets measured at fair value	$	62,034	$	218,646	$	—	$	280,680

Derivatives - VIEs	Derivatives - VIEs	7,362		4,822		0		12,184		Derivatives - VIEs	18,383		3,284		—		21,667
Derivatives - VOEs		7,071		686		0		7,757

Total liabilities measured at fair value	Total liabilities measured at fair value	$	14,433	$	5,508	$	0	$	19,941	Total liabilities measured at fair value	$	18,383	$	3,284	$	—	$	21,667

December 31, 2020:	December 31, 2020:									December 31, 2020:
Investments - VIEs	Investments - VIEs	$	73,909	$	168,114	$	518	$	242,541	Investments - VIEs	$	73,909	$	168,114	$	518	$	242,541
Investments - VOEs	Investments - VOEs	0		59,940		101		60,041		Investments - VOEs	—		59,940		101		60,041
Derivatives - VIEs	Derivatives - VIEs	442		2,782		0		3,224		Derivatives - VIEs	442		2,782		—		3,224
Derivatives - VOEs	Derivatives - VOEs	0		464		0		464		Derivatives - VOEs	—		464		—		464
Total assets measured at fair value	Total assets measured at fair value	$	74,351	$	231,300	$	619	$	306,270	Total assets measured at fair value	$	74,351	$	231,300	$	619	$	306,270

Derivatives - VIEs	Derivatives - VIEs	$	1,649	$	5,244	$	0	$	6,893	Derivatives - VIEs	$	1,649	$	5,244	$	—	$	6,893
Derivatives - VOEs	Derivatives - VOEs	0		664		0		664		Derivatives - VOEs	—		664		—		664
Total liabilities measured at fair value	Total liabilities measured at fair value	$	1,649	$	5,908	$	0	$	7,557	Total liabilities measured at fair value	$	1,649	$	5,908	$	—	$	7,557

See Note 11 for a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

The change in carrying value associated with Level 3 financial instruments carried at fair value within consolidated company-sponsored investment funds was as follows:


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
			2021		2020				2021		2020		2021		2020
			(in thousands)						(in thousands)

Balance as of beginning of period	Balance as of beginning of period		$	619	$	854		Balance as of beginning of period	$	210	$	517	$	619	$	854

Transfers (out) in			(10)		231
Deconsolidated funds								Deconsolidated funds	—		—		(717)		(135)
Transfers (out) in, net								Transfers (out) in, net	(202)		(6)		(212)		565
Purchases	Purchases		119		33			Purchases	—		61		323		107
Sales	Sales		(3)		(362)			Sales	(4)		(7)		(7)		(451)
Realized gains (losses), net	Realized gains (losses), net		3		0			Realized gains (losses), net	—		(7)		3		(21)
Unrealized gains (losses), net	Unrealized gains (losses), net		(11)		(224)			Unrealized gains (losses), net	(4)		39		(9)		(323)
Accrued discounts	Accrued discounts		0		2			Accrued discounts	—		—		—		1
Balance as of end of period	Balance as of end of period		$	717	$	534		Balance as of end of period	$	—	$	597	$	—	$	597

Index

The Level 3 securities primarily consist of corporate bonds that are vendor priced with no ratings available, bank loans, non-agency collateralized mortgage obligations and asset-backed securities.

Transfers into and out of all levels of the fair value hierarchy are reflected at end-of-period fair values. Realized and unrealized gains and losses on Level 3 financial instruments are recorded in investment gains and losses in the condensed consolidated statements of income.

Derivative Instruments

As of ~~March 31,~~September 30, 2021 and December 31, 2020, the VIEs held ~~$9.3~~$17.2 million and $3.7 million (net), respectively, of futures, forwards and swaps within their portfolios. For the three and nine months ended ~~March 31,~~September 30, 2021, we recognized $1.5 million and $0.8 million of losses, respectively, on these derivatives. For the three and nine months ended September 30, 2020, we recognized ~~$1.1~~$0.6 million of gains and ~~$1.7~~$0.1 million of losses, respectively, on these derivatives. These gains and losses are recognized in investment gains (losses) in the condensed consolidated statements of income.

As of ~~March 31,~~September 30, 2021 and December 31, 2020, the VIEs held ~~$0.6~~$1.0 million and $0.5 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in the liabilities of consolidated company-sponsored investment funds in our condensed consolidated statements of financial condition.

As of ~~March 31,~~September 30, 2021 and December 31, 2020, the VIEs delivered ~~$4.9~~$1.1 million and $4.2 million, respectively, of cash collateral into brokerage accounts. The VIEs report this cash collateral in the consolidated company-sponsored investment funds cash and cash equivalents in our condensed consolidated statements of financial condition.

As of ~~March 31,~~September 30, 2021 and December 31, 2020, the VOEs held ~~$5.4 million~~zero and $0.2 million (net), respectively, of futures, forwards, options and swaps within their portfolios. For the three and nine months ended ~~March 31,~~September 30, 2021, we recognized zero and $0.9 million of gains, respectively, on these derivatives. For the three and nine months ended September 30, 2020, we recognized ~~$0.9~~$1.3 million and ~~$0.1~~$2.2 million of ~~gains,~~losses, respectively, on these derivatives. These gains and losses are recognized in investment gains (losses) in the condensed consolidated statements of income.

As of both ~~March 31,~~September 30, 2021 and December 31, 2020, the VOEs held 0no cash collateral payable to trade counterparties. This obligation to return cash is reported in the liabilities of consolidated company-sponsored investment funds in our condensed consolidated statements of financial condition.

As of ~~March 31,~~September 30, 2021 and December 31, 2020, the VOEs delivered 0zero and $0.1 million, respectively, of cash collateral in brokerage accounts. The VOEs report this cash collateral in the consolidated company-sponsored investment funds cash and cash equivalents in our condensed consolidated statements of financial condition.

Offsetting Assets and Liabilities

Offsetting of derivative assets of consolidated company-sponsored investment funds as of ~~March 31,~~September 30, 2021 and December 31, 2020 was as follows:


		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Received		Net Amount			Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Received		Net Amount
		(in thousands)													(in thousands)
March 31, 2021:
September 30, 2021:														September 30, 2021:
Derivatives - VIEs	Derivatives - VIEs	$	2,904	$	0	$	2,904	$	0	$	(551)	$	2,353	Derivatives - VIEs	$	4,481	$	—	$	4,481	$	—	$	(1,005)	$	3,476
Derivatives - VOEs		$	2,395	$	0	$	2,395	$	0	$	0	$	2,395

December 31, 2020:	December 31, 2020:													December 31, 2020:
Derivatives - VIEs	Derivatives - VIEs	$	3,224	$	0	$	3,224	$	0	$	(513)	$	2,711	Derivatives - VIEs	$	3,224	$	—	$	3,224	$	—	$	(513)	$	2,711
Derivatives - VOEs	Derivatives - VOEs	$	464	$	0	$	464	$	0	$	0	$	464	Derivatives - VOEs	$	464	$	—	$	464	$	—	$	—	$	464

Index

Offsetting of derivative liabilities of consolidated company-sponsored investment funds as of ~~March 31,~~September 30, 2021 and December 31, 2020 was as follows:


		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Liabilities Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Pledged		Net Amount			Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Liabilities Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Pledged		Net Amount
		(in thousands)													(in thousands)
March 31, 2021:
September 30, 2021:														September 30, 2021:
Derivatives - VIEs	Derivatives - VIEs	$	12,184	$	0	$	12,184	$	0	$	(4,929)	$	7,255	Derivatives - VIEs	$	21,667	$	—	$	21,667	$	—	$	(1,075)	$	20,592
Derivatives - VOEs		$	7,757	$	0	$	7,757	$	0	$	0	$	7,757

December 31, 2020:	December 31, 2020:													December 31, 2020:
Derivatives - VIEs	Derivatives - VIEs	$	6,893	$	0	$	6,893	$	0	$	(4,201)	$	2,692	Derivatives - VIEs	$	6,893	$	—	$	6,893	$	—	$	(4,201)	$	2,692
Derivatives - VOEs	Derivatives - VOEs	$	664	$	0	$	664	$	0	$	(138)	$	526	Derivatives - VOEs	$	664	$	—	$	664	$	—	$	(138)	$	526

Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty.

Non-Consolidated VIEs

As of ~~March 31,~~September 30, 2021, the net assets of company-sponsored investment products that are non-consolidated VIEs are approximately ~~$70.9~~$70.4 billion, and our maximum risk of loss is our investment of ~~$7.2~~$8.3 million in these VIEs and our advisory fee receivables from these VIEs is ~~$76.1~~$74.9 million.

15. Units Outstanding

Changes in AB Units outstanding during the ~~three-month~~nine-month period ended ~~March 31,~~September 30, 2021 were as follows:


Outstanding as of December 31, 2020			270,509,658
Options exercised			~~79,108~~143,211
Units issued			~~2,847,552~~3,041,072
Units retired(1)			~~(761,153)~~(2,758,477)
Outstanding as of ~~March 31,~~September 30, 2021			~~272,675,165~~270,935,464

(1) During the ~~three-months~~nine months ended ~~March 31,~~September 30, 2021, we purchased ~~1,400~~5,400 AB Units in private transactions and retired them.

16. Debt

AB has an $800.0 million committed, unsecured senior revolving credit facility (the “Credit Facility”) with a group of commercial banks and other lenders, which matures on September 27, 2023. Subsequent to September 30, 2021, AB amended and restated its existing credit facility agreement (refer to Note 18 Subsequent Events for further details). The Credit Facility provides for possible increases in the principal amount by up to an aggregate incremental amount of $200.0 million; any such increase is subject to the consent of the affected lenders. The Credit Facility is available for AB and Sanford C. Bernstein & Co., LLC ("SCB LLC") business purposes, including the support of AB’s commercial paper program. Both AB and SCB LLC can draw directly under the Credit Facility, and management may draw on the Credit Facility from time to time. AB has agreed to guarantee the obligations of SCB LLC under the Credit Facility.

The Credit Facility contains affirmative, negative and financial covenants, which are customary for facilities of this type, including restrictions on dispositions of assets, restrictions on liens, a minimum interest coverage ratio and a maximum leverage ratio. As of ~~March 31,~~September 30, 2021, we were in compliance with these covenants. The Credit Facility also includes customary events of default (with customary grace periods, as applicable), including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or lender’s commitments may be terminated. Also, under such provisions, upon the occurrence of certain insolvency- or bankruptcy-related events of

Index

default, all amounts payable under the Credit Facility would automatically become immediately due and payable, and the lender’s commitments automatically would terminate.

~~Index~~

Amounts under the Credit Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. Voluntary prepayments and commitment reductions requested by us are permitted at any time without a fee (other than customary breakage costs relating to the prepayment of any drawn loans) upon proper notice and subject to a minimum dollar requirement. Borrowings under the Credit Facility bear interest at a rate per annum, which will be, at our option, a rate equal to an applicable margin, which is subject to adjustment based on the credit ratings of AB, plus one of the following indices: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate.

As of ~~March 31,~~September 30, 2021 and December 31, 2020, we had 0no amounts outstanding under the Credit Facility. ~~During~~Furthermore, during the first ~~three~~nine months of 2021 and the full year 2020, we did not draw upon the Credit Facility.

AB also has a $900.0 million committed, unsecured senior credit facility (“EQH Facility”) with EQH. The EQH Facility matures on November 4, 2024 and is available for AB's general business purposes. Borrowings under the EQH Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates.

The EQH Facility contains affirmative, negative and financial covenants which are substantially similar to those in AB’s committed bank facilities. The EQH Facility also includes customary events of default substantially similar to those in AB’s committed bank facilities, including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or the lender’s commitment may be terminated.

Amounts under the EQH Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. AB or EQH may reduce or terminate the commitment at any time without penalty upon proper notice. EQH also may terminate the facility immediately upon a change of control of our general partner.

As of ~~March 31,~~September 30, 2021 and December 31, 2020, AB had ~~$625.0~~$390.0 million and $675.0 million outstanding under the EQH Facility, in each case with an interest rate of approximately 0.2%. Average daily borrowings on the EQH Facility for the first ~~three~~nine months of 2021 and the full year 2020 were ~~$622.3~~$434.0 million and $470.8 million, respectively, with weighted average interest rates of approximately 0.2% and 0.5%, respectively.

In addition to the EQH Facility, on September 1, 2020, AB established a new $300.0 million uncommitted, unsecured senior credit facility (“EQH Uncommitted Facility”) with EQH. The EQH Uncommitted Facility matures on September 1, 2024 and is available for AB's general business purposes. Borrowings under the EQH Unsecured Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates. The EQH Uncommitted Facility contains affirmative, negative and financial covenants which are substantially similar to those in the EQH Facility. As of ~~March 31,~~September 30, 2021 and December 31, 2020, we had 0no amounts outstanding onunder the EQH Uncommitted Facility. ~~During~~Furthermore, during the first ~~three~~nine months of 2021 and the full year 2020, we did not draw upon the EQH Uncommitted Facility.

As of ~~March 31,~~September 30, 2021 and December 31, 2020, we had 0no commercial paper outstanding. The commercial paper is short term in nature, and as such, recorded value is estimated to approximate fair value (and considered a Level 2 security in the fair value hierarchy). Average daily borrowings of commercial paper during the first ~~three~~nine months of 2021 and full year 2020 were ~~$120.3~~$151.7 million and $83.2 million, respectively, with weighted average interest rates of approximately 0.2% and 0.4%, respectively.

AB has a $200.0 million committed, unsecured senior revolving credit facility (the "Revolver") with a leading international bank, which matures on November 16, ~~2021.~~2021 and we do not expect to renew this facility. The Revolver is available for AB's and SCB LLC's business purposes, including the provision of additional liquidity to meet funding requirements primarily related to SCB LLC's operations. Both AB and SCB LLC can draw directly under the Revolver and management expects to draw on the Revolver from time to time. AB has agreed to guarantee the obligations of SCB LLC under the Revolver. The Revolver contains affirmative, negative and financial covenants that are identical to those of the Credit Facility. Borrowings under the Revolver bear interest at a rate per annum, which will be, at our option, a rate equal to an applicable margin, which is subject to adjustment based on the credit ratings of AB, plus one of the following indices: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate. As of both ~~March 31,~~September 30, 2021 and December 31, 2020, we had 0no amounts outstanding under the Revolver. Average daily borrowings under the Revolver during the first ~~three~~nine months of 2021 and full year 2020 were ~~$26.1~~$17.3 million and $16.5 million, respectively, with weighted average interest rates of approximately 1.1% and 1.6%, respectively.

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On September 28, 2021, AB established a $100.0 million uncommitted line of credit with a financial institution. This line of credit matures on September 27, 2022 and is available for AB's and SCB LLC's business purposes. Both AB and SCB LLC can draw directly under this line. AB has agreed to guarantee the obligations of SCB LLC under this line of credit. As of September 30, 2021, we had no amounts outstanding under this line of credit and have not drawn on it since inception. Subsequent to September 30, 2021, we entered into 1 additional uncommitted line of credit (refer to Note 18 Subsequent Events for further details).

In addition, SCB LLC currently has 3 uncommitted lines of credit with 3 financial institutions. NaN of these lines of credit permit us to borrow up to an aggregate of approximately $165.0 million, with AB named as an additional borrower, while the other line has no stated limit. As of ~~March 31,~~September 30, 2021 and December 31, 2020, SCB LLC had 0no outstanding

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balance on these lines of credit. We did not draw on these lines of credit during the first ~~three~~nine months of 2021. Average daily borrowings during the full year 2020 were $0.9 million with a weighted average interest rate of approximately 1.6%.

17. Non-controlling Interests

Non-controlling interest in net (loss) income for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 consisted of the following:


		Three Months Ended March 31,						Three Months Ended September 30,				Nine Months Ended September 30,
				2021		2020				2021		2020		2021		2020
			(in thousands)							(in thousands)

Redeemable non-controlling interests:	Redeemable non-controlling interests:								Redeemable non-controlling interests:
Consolidated company-sponsored investment funds	Consolidated company-sponsored investment funds			$	(292)	$	(25,571)		Consolidated company-sponsored investment funds	(1,074)		81		$	2,207	$	(4,550)
Total non-controlling interest in net income				$	(292)	$	(25,571)
Total non-controlling interest in net (loss) income									Total non-controlling interest in net (loss) income	$	(1,074)	$	81	$	2,207	$	(4,550)

Redeemable non-controlling interest as of ~~March 31,~~September 30, 2021 and December 31, 2020 consisted of the following:


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
		(in thousands)					(in thousands)
Consolidated company-sponsored investment funds	Consolidated company-sponsored investment funds	$	88,567	$	102,359	Consolidated company-sponsored investment funds	$	117,804	$	102,359

Total redeemable non-controlling interest	Total redeemable non-controlling interest	$	88,567	$	102,359	Total redeemable non-controlling interest	$	117,804	$	102,359

18. Subsequent Events

Credit Facility

On October 13, 2021, AB amended and restated the existing Credit Facility agreement, extending the maturity date from September 27, 2023 to October 13, 2026. There were no other significant changes included in the amendment.

Uncommitted Line of Credit

On October 11, 2021, AB established a $50.0 million uncommitted line of credit with a financial institution. This line of credit is available for AB's and SCB LLC's business purposes. Both AB and SCB LLC can draw directly under this line and management expects to draw on it from time to time. AB has agreed to guarantee the obligations of SCB LLC under this line of credit.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Impact of COVID-19

General Economic Conditions

During the first quarter of 2020, COVID-19 significantly impacted the global economy. The impact has been profound, has continued through the first ~~quarter~~nine months of 2021, and may persist for months to come. While ~~many~~most businesses have re-opened, vaccinations are ~~underway (particularly~~progressing in most portions of the ~~U.S., the U.K. and Israel)~~world and leading economic indicators ~~are showing signs of improvement,~~have improved significantly, the overall extent and duration of COVID-19's impact on businesses and economic activity generally remains unclear.

Governments around the world have responded to COVID-19 with economic stimulus measures, including a $2 trillion emergency relief bill passed in the U.S. during the first quarter of 2020, an additional $900 billion in aid passed during the fourth quarter of 2020, and the most recent $1.9 trillion COVID-19 relief package passed in the first quarter of 2021. Similar fiscal stimulus was passed by many governments around the world. These measures and possible additional stimulus and aid measures are intended to steady businesses and consumers until economic activity meaningfully recovers. The timing and magnitude of any such recovery, however, remains uncertain.

Various countries around the world, and certain areas in the U.S., have continued to experience surges in the rates of COVID-19 infections, which have resulted from the emergence and spread of ~~mutated strains of~~virus variants (particularly the ~~virus,~~"delta variant"), greatly increased social interactions, including at colleges and universities and social venues, after re-opening of economies, and decreased usage of mitigation techniques, such as ~~mask wearing~~mask-wearing and social distancing, in ~~some areas.~~combination with large portions of the population remaining unvaccinated. These ongoing circumstances surrounding the virus may adversely affect consumer sentiment and the ~~pace~~durability of business re-openings, and they also may ~~delay or~~ slow economic recovery and possibly cause additional market ~~volatility.~~volatility and even a new downturn.

AB Impact

At the onset of COVID-19 during the first quarter of 2020, we quickly responded in the various jurisdictions where we operate, including the U.S., the U.K., Tokyo, Hong Kong, Shanghai, Singapore and Taiwan. We implemented business continuity measures, including travel restrictions and a work-from-home requirement for almost all personnel (other than a relatively small number of employees whose physical presence in our offices was considered critical), which ~~has~~generally remained in place ~~(except in our Asia-Pacific offices, most of which have reopened)~~ throughout 2020 and the first ~~quarter~~nine months of 2021 to ensure operating continuity for all critical functions. During the third quarter of 2021, we began implementing gradual return to office programs for our U.S. and European offices. However, we continue to monitor the daily evolution of the pandemic, including the spread of the delta variant, in order to ensure the health and safety of our employees remains our top priority. We ~~also~~will modify our return to office plans, as needed, to ensure the safety of our employees and to ensure that the highest safety and cleanliness protocols are followed. We believe that our business continuity plan and technology platform will continue to support the effectiveness of our employees working remotely to the extent that we continue that arrangement.

Additionally, we instituted a notification process in 2020, which persists today, for any employee who tests positive for COVID-19 or has been exposed to someone else who has tested positive. As the COVID-19 crisis has continued to evolve since the lockdown in the first quarter of 2020, certain key functions of the business, such as Risk Management, Business Continuity, Finance and Human Capital, have maintained constant communication and monitored the evolution of the pandemic to keep our employees safe and disseminate information regarding key developments. ~~Additionally, we~~We also continue to monitor communications from the World Health Organization and the U.S. Centers for Disease Control and Prevention to ensure we have current information.

WeFurthermore, we have ~~continued to enhance our technology, which has increased the effectiveness of our remote work force. We have also~~ continued to enhance our virtual programs to support business functions, such as training on cybersecurity and enhancements to our existing technology ~~platforms.~~platforms, which has increased the effectiveness of our remote work force. There has been a heightened focus on the emotional well-being of our employees, and we have provided regular touch points with employees through virtual town halls and management communications. Additionally, we have maintained regular communications and updates on the virus and the Company's response, which are posted on the Company's internal website, to ensure transparent communication with our employees.

We continue to consider, and in some cases methodically implement, return to office programs for our U.S. and European offices. (As noted above, most of our Asia-Pacific offices re-opened in 2020.) In fact, we hope and expect to gradually bring our workforce back into the office, across each of our locations, early in the third quarter of 2021. However, we continue to monitor the daily evolution of the pandemic in order to ensure the health and safety of our employees remains our top priority. We will modify our return to office plans, as needed, to ensure the safety of our employees and to ensure that the highest safety and cleanliness protocols are followed. We believe that our business continuity plan and technology platform will continue to support the effectiveness of our employees working remotely.

The economic impact of COVID-19 and any additional declines in the financial markets could have a significant adverse effect on our AUM and revenues, particularly if economic activity does not continue to recover. Although countries throughout the world continue to grapple with re-opening their economies, ~~this will continue to be a gradual process, and~~ there is a significant risk that the opening process may be ~~further~~ interrupted or reversed if infection rates increase. Also, although unemployment rates have declined, they are still ~~considered high~~somewhat elevated and any reluctance of consumers to resume spending could do long-term damage to the

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global economy, which would have an adverse effect on our business. Additionally, as most of our workforce continues working remotely, at least part of the time, we are mindful of increased risk related to cybersecurity, which could significantly disrupt our business functions.

Ultimately, the return to normal business and economic activity will likely require the broad application of effective vaccines. The distribution of multiple safe, effective vaccines was initiated towards the end of the fourth quarter of 2020 and the distribution of such vaccines ~~has~~generally increased globally through the first ~~quarter~~nine months of ~~2021, particularly~~2021. However, the rate of new vaccinations in the U.S.~~, the U.K.~~ plateaued, and ~~Israel. Furthermore, while issues persist around the speed, selective nature of those who are eligible~~in some areas began to receive the vaccination, as well as logistical challenges regarding availability and distribution of the vaccines, most people in the U.S. who are at least 16 years of age and want to be vaccinated likely will be vaccinateddecrease, by the end of the second quarter of 2021. If global vaccination rates do not improve further, a significant risk will remain that COVID-19 and/or a variant thereof, could accelerate global health concerns and, in so doing, cause heightened market and economic turmoil in the future.

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Executive Overview

Our total assets under management (“AUM”) as of ~~March 31,~~September 30, 2021 were ~~$697.2~~$742.2 billion, up ~~$11.3~~$3.8 billion, or ~~1.6%~~0.5%, compared to ~~December 31, 2020,~~June 30, 2021, and up ~~$155.4~~$111.4 billion, or ~~28.7%~~17.7%, compared to ~~March 31,~~September 30, 2020. During the ~~first~~third quarter of 2021, AUM increased as a result of net inflows of $7.2 billion, offset by market depreciation of $3.4 billion (Retail net inflows of $6.6 billion, Private Wealth Management net inflows of $0.4 billion and Institutional net inflows of $0.2 billion). During the twelve months ended September 30, 2021, AUM increased as a result of market appreciation of ~~$6.1~~$89.5 billion and net inflows of ~~$5.2~~$21.9 billion (Retail net inflows of $2.7 billion, Private Wealth Management net inflows of $1.7 billion and Institutional net inflows of $0.8 billion). During the twelve months ended March 31, 2021, AUM increased as a result of market appreciation of $147.2 billion and net inflows of $8.2 billion (Retail net inflows of $6.5$13.8 billion, Institutional net inflows of ~~$1.4~~$6.9 billion and Private Wealth Management net inflows of ~~$0.3~~$1.2 billion). Excluding ~~AXA's~~AXA S.A.'s ("AXA") redemption of low-fee fixed income mandates of ~~$10.8~~$2.0 billion, (~~see discussion below~~), the firm generated net inflows of ~~$19.0~~$23.9 billion during the twelve months ended ~~March 31,~~September 30, 2021. ~~There were no outflows resulting from AXA's ongoing redemption during~~We expect new redemptions by AXA of low-fee retail AUM in the ~~three months ended March 31, 2021.~~first half of 2022 of approximately $5 billion.

Institutional AUM decreased ~~$0.9~~$1.6 billion, or ~~0.3%~~0.5%, to ~~$314.7~~$327.5 billion during the ~~first~~third quarter of 2021, ~~primarily~~ due to market depreciation of ~~$1.5~~$1.8 billion, ~~driven by fixed income markets which declined in the quarter, partially~~ offset by net inflows of ~~$0.8~~$0.2 billion. Gross sales decreased sequentially from ~~$9.9~~$17.6 billion during the ~~fourth~~second quarter of ~~2020~~2021 to ~~$4.9~~$2.6 billion during the ~~first~~third quarter of 2021. Redemptions and terminations decreased sequentially from $13.7 billion to $2.9 billion. The significant sequential change in sales and redemptions primarily resulted from the second quarter of 2021 including $8.7 billion in sales and $10.0 billion in redemptions associated with a sale by Equitable Holdings, Inc ("EQH") to Venerable Holdings, of its legacy variable annuity assets, for which AB remained the preferred investment manager.

Retail AUM increased $5.1 billion, or 1.7%, to $298.8 billion during the third quarter of 2021, due to net inflows of $6.6 billion, offset by market depreciation of $1.5 billion. Gross sales increased sequentially from $23.8 billion during the second quarter of 2021 to $25.6 billion during the third quarter of 2021. Redemptions and terminations decreased sequentially from $15.3 billion to $15.0 billion.

Private Wealth Management AUM increased $0.3 billion, or 0.3%, to $115.9 billion during the third quarter of 2021, due to net inflows of $0.4 billion, offset by market depreciation of $0.1 billion. Gross sales increased sequentially from $3.6 billion during the second quarter of 2021 to $4.1 billion during the third quarter of 2021. Redemptions and terminations increased sequentially from ~~$2.0~~$3.4 billion to ~~$2.8 billion.~~

Retail AUM increased $7.0 billion, or 2.6%, to $272.3 billion during the first quarter of 2021, primarily due to market appreciation of $4.1 billion and net inflows of $2.7 billion. Gross sales increased sequentially from $17.7 billion during the fourth quarter of 2020 to $23.0 billion during the first quarter of 2021. Redemptions and terminations increased sequentially from $15.2 billion to $17.7 billion.

Private Wealth Management AUM increased $5.2 billion, or 5.0%, to $110.2 billion during the first quarter of 2021, due to market appreciation of $3.5 billion and net inflows of $1.7 billion. Gross sales increased sequentially from $3.7 billion during the fourth quarter of 2020 to $5.4 billion during the first quarter of 2021. Redemptions and terminations decreased sequentially from $4.8 billion to $3.7$3.6 billion.

Bernstein Research Services revenue for the ~~first~~third quarter of 2021 was ~~$119.0~~$113.3 million, ~~down $10.2~~up $14.8 million, or ~~7.9%~~15.0%, compared to the ~~first~~third quarter of 2020 due to ~~reduced~~higher customer trading activity ~~driven by fewer trading days~~ and ~~decreased market volatility, as compared to the COVID-related significant surge in trading volume experienced during the three months ended March 31, 2020.~~research payments across all regions.

Net revenues for the ~~first~~third quarter of 2021 increased ~~$133.1~~$192.8 million, or ~~15.2%~~21.4%, to ~~$1.0~~$1.1 billion from ~~$874.2~~$900.0 million in the ~~first~~third quarter of 2020. The increase was primarily due to higher investment advisory base fees of ~~$74.1 million, higher investment gains of $46.2~~$134.9 million, higher distribution revenues of ~~$16.7~~$34.9 million, higher Bernstein Research Services revenue of $14.8 million and higher performance-based fees of ~~$7.6~~$11.3 million, partially offset by ~~lower Bernstein Research Services revenue~~investment losses compared to investment gains in the prior year third quarter of ~~$10.2~~$3.8 million. Operating expenses for the ~~first~~third quarter of 2021 increased ~~$50.7~~$130.3 million, or ~~7.3%~~19.1%, to ~~$746.7~~$813.2 million from ~~$695.9~~$682.9 million in the ~~first~~third quarter of 2020. The increase was primarily due to higher employee compensation and benefits expenses of ~~$43.8~~$76.1 million, ~~and~~ higher promotion and servicing expense of ~~$15.6~~$46.5 million and higher general and administrative expenses of $12.7 million, partially offset by lower amortization of intangible assets of ~~$5.0 million, lower general and administrative expenses of $2.0 million and lower interest on borrowings of $1.5~~$5.3 million. Our operating income increased ~~$82.4~~$62.5 million, or ~~46.2%~~28.8%, to ~~$260.6~~$279.7 million from ~~$178.2~~$217.1 million and our operating margin increased to ~~25.9%~~25.7% in the ~~first~~third quarter of 2021 from ~~23.3%~~24.1% in the ~~first~~third quarter of 2020.

Market Environment

Despite market gains through the majority of the third quarter, U.S. equity markets experienced a seasonal slowdown in September. The S&P 500 finished marginally higher, while both the Dow Jones Industrial Average and Nasdaq each finished the quarter in negative territory. The Federal Reserve signaled it would start tapering its asset purchases by the end of the year and any interest rate hikes will likely not commence until the tapering process is complete. In the U.K., natural gas and fuel shortages were prevalent towards the end of the third quarter. The supply bottlenecks coupled with labor shortages triggered a sharp rise in underlying inflation and led to concerns that the Bank of England may begin raising rates in the near future. In China, investor concerns grew over supply chain disruptions and recent power outages, which led to energy rationing. Furthermore, uncertainty remains around the path of future regulation, particularly as it relates to technology companies.

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~~Market Environment~~

U.S. equity markets remained strong during the first quarter of 2021, with the S&P 500, Dow Jones Industrial Average and Nasdaq each finishing the quarter in positive territory. The U.S. seeks to continue to emerge from the pandemic by accelerating progress on vaccinations combined with unprecedented levels of fiscal stimulus. The Federal Reserve has pledged to maintain its current accommodative monetary policy until inflation has exceeded their target for a sustained time period. In the U.K., the rapid roll-out of the vaccine is expected to facilitate relatively strong growth from the second quarter onwards, with Brexit-related trade frictions expected to ease starting in the second half of this year. Government stimulus should assist in keeping unemployment relatively low, while the Bank of England is likely to keep rates on hold during the recovery phase. In China, the market outlook remains positive, as a broader global re-opening appears to be benefiting the Chinese economy. Given the strong recovery from the pandemic, China will likely begin a slow and gradual tightening of their fiscal policy. While political tensions between China and the U.S. continue to linger, further escalation from the new U.S. administration in the near term seems unlikely.MiFID II

~~MiFID II~~

In Europe, MiFID II, which has been effective since 2018, has significantly modified how European broker-dealers can be compensated for research. These modifications have significantly reduced the overall research spend by many European buy-side firms, which has decreased the revenues we earn from these clients. If this trend continues, the revenues we earn from our European clients would deplete further.

Also, while MiFID II does not apply outside of Europe, competitive and client pressures may force buy-side firms operating outside of Europe to pay for research from their own resources instead of through bundled trading commissions. If this occurs, research budgets from those clients, as well as our sell-side revenues, may decrease further. Additionally, these pressures could force our buy-side operation to pay for research out of our own revenues instead of through bundled trading commissions, which could increase our firm’s expenses and decrease our operating income.

Lastly, although the impact of MiFID II is largely known, the ultimate, global impact is still uncertain.

Relationship with ~~Equitable Holdings~~EQH

AB and ~~AXA~~

~~Prior~~EQH are collaborating to ~~an initial public offering ("IPO")~~each firm's expected mutual benefit to improve the risk-adjusted yield for EQH's General Account by ~~Equitable Holdings, Inc. (“EQH”)~~investing more assets at AB, including the utilization of AB's higher-fee, longer-duration alternative offerings. EQH has agreed to provide $10 billion in ~~May of 2018,~~permanent capital1 over the next three years to build out AB’s private illiquid offerings, including private alternatives and private placements. We expect this anticipated capital from EQH ~~was a wholly-owned subsidiary of AXA S.A. ("AXA"). Since the IPO, AXA has divested its ownership in EQH to less than 10% of the outstanding common stock of EQH as of March 31, 2021.~~

While we cannot at this time predict the full impact on AB of these transactions, such impact has included a reduction in the support AXA provided to AB in the past with respect to AB's investment management business, resulting in a modest decreasewill accelerate both organic and inorganic growth in our ~~revenues~~private alternatives business, allowing us to continue to deliver for our clients, employees, unitholders and ~~ability to initiate new investment services.~~

other stakeholders.

Our ending AUM at March 31, 2021 reflects $11.8 billion in outflows resulting from AXA's redemption of certain low-fee fixed income mandates during 2020. No redemptions were made during the three months ended March 31, 2021. We currently anticipate AXA to redeem the majority of approximately $2 billion of additional assets during the three months ending June 30, 2021, bringing the total assets redeemed to approximately $14 billion. The revenue we earn from the management of these assets is not significant.

Relocation Strategy

We previously announced that we would establish our corporate headquarters in, and relocate approximately 1,250 jobs located in the New York metro area to, Nashville, TN. Our Nashville headquarters ~~will house~~houses Finance, IT, Operations, Legal, Compliance, Internal Audit, Human Capital, and Sales and Marketing. We have been actively relocating jobs and expect this transition to take several more years. We are in the process of moving into our new headquarters office building located at 501 Commerce Street in downtown Nashville. We will continue to maintain a principal location in New York City, which ~~will house~~houses our Portfolio Management, Sell-Side Research and Trading, and New York-based Private Wealth Management businesses.

We believe relocating our corporate headquarters to Nashville affords us the opportunity to provide an improved quality of life alternative for our employees and enable us to attract and recruit new talented employees to a highly desirable location while improving the long-term cost structure of the firm.

During the transition period, which began in 2018 and is expected to continue through 2024, we currently estimate that we will incur transition costs of approximately $145 million to $155 million. These costs include employee relocation, severance, recruitment, and overlapping compensation and occupancy costs. Over this same period, we expect to realize total expense savings of approximately $205 million to $215 ~~million, an amount greater than the total transition costs.~~million. However, we did incur

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some transition costs before we began to realize expense savings. For the period beginning in 2018 and ending in the fourth quarter of 2020, we incurred $70 million of cumulative transition costs compared to $46 million of cumulative savings. In addition, we incurred $7$20 million of transition costs for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 compared to ~~$10~~$31 million of expense savings, resulting in an overall net savings of $3$11 million for the period. We currently anticipate an EPU increase in 2021 of approximately ~~$0.02~~$0.04 resulting from our relocation strategy, which compares to the $0.01 EPU increase that occurred in 2020. We also expect to achieve EPU accretion in each year thereafter. Beginning in 2025, once the transition period has been completed, we estimate ongoing annual expense savings ~~towards the upper end~~ of ~~the range of~~approximately $75 million to $80 million, which will result from a combination of occupancy and compensation-related savings. Our estimates for both the transition costs and the corresponding expense savings are based on our current assumptions of employee relocation costs, severance, and overlapping compensation and occupancy costs. In addition, our estimates for both the timing of when we incur transition costs and realize the related expense savings are based on our current relocation implementation plan and the timing for execution of each phase. The actual total charges we eventually record, the related expense savings we realize, and timing of EPU impact may differ from our current estimates as we implement each phase of our headquarters relocation.

1Permanent capital means investment capital of indefinite duration which may be withdrawn under certain conditions. Although EQH has indicated its intention over time to provide this investment capital to AB, which is mutually beneficial to both firms, it has no binding commitment to do so.

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During October 2018, we signed a lease, which commenced in the fourth quarter of 2020, relating to 218,976 square feet of space at our new Nashville headquarters. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 15-year initial lease term is $134 million.

Although we have presented our transition costs and annual expense savings with numerical specificity, and we believe these targets to be reasonable as of the date of this report, the uncertainties surrounding the assumptions we discuss above create a significant risk that these targets may not be achieved. Accordingly, the expenses we actually incur and the savings we actually realize may differ from our targets, particularly if actual events adversely differ from one or more of our key assumptions. The transition costs and expense savings, together with their underlying assumptions, are Forward-Looking Statements and can be affected by any of the factors discussed in ~~“Risk~~“Risk Factors” and ~~“Cautions~~“Cautions Regarding Forward-Looking Statements” in this 10-Q and our 2020 10-K. We strongly caution investors not to place undue reliance on any of these assumptions or our cost and expense targets. Except as may be required by applicable securities laws, we are not under any obligation, and we expressly disclaim any obligation, to update or alter any assumptions, estimates, financial goals, targets, projections or other related statements that we may make.

Assets Under Management

Assets under management by distribution channel are as follows:


		As of March 31,									As of September 30,
		2021		2020		$ Change		% Change			2021		2020		$ Change		% Change
		(in billions)									(in billions)

Institutions	Institutions	$	314.7	$	256.7	$	58.0	22.6	%	Institutions	$	327.5	$	289.5	$	38.0	13.1	%
Retail	Retail	272.3		198.6		73.7		37.1		Retail	298.8		242.9		55.9		23.0
Private Wealth Management	Private Wealth Management	110.2		86.5		23.7		27.3		Private Wealth Management	115.9		98.4		17.5		17.7
Total	Total	$	697.2	$	541.8	$	155.4	28.7	%	Total	$	742.2	$	630.8	$	111.4	17.7	%

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Assets under management by investment service are as follows:


		As of March 31,									As of September 30,
		2021		2020		$ Change		% Change			2021		2020		$ Change		% Change
		(in billions)									(in billions)
Equity	Equity									Equity
Actively Managed	Actively Managed	$	231.8	$	141.5	$	90.3	63.9	%	Actively Managed	$	260.3	$	188.8	$	71.5	37.8	%
Passively Managed(1)	Passively Managed(1)	66.3		47.2		19.1		40.4		Passively Managed(1)	69.1		57.5		11.6		20.2
Total Equity	Total Equity	298.1		188.7		109.4		58.0		Total Equity	329.4		246.3		83.1		33.7

Fixed Income	Fixed Income									Fixed Income
Actively Managed	Actively Managed									Actively Managed
Taxable	Taxable	252.2		236.1		16.1		6.8		Taxable	250.9		253.3		(2.4)		(0.9)
Tax–exempt	Tax–exempt	51.8		45.9		5.9		12.8		Tax–exempt	55.3		48.7		6.6		13.7
		304.0		282.0		22.0		7.8			306.2		302.0		4.2		1.4

Passively Managed(1)	Passively Managed(1)	8.3		10.3		(2.0)		(19.5)		Passively Managed(1)	9.5		9.0		0.5		5.5
Total Fixed Income	Total Fixed Income	312.3		292.3		20.0		6.8		Total Fixed Income	315.7		311.0		4.7		1.5

Alternatives/Multi-Asset Solutions(2)	Alternatives/Multi-Asset Solutions(2)									Alternatives/Multi-Asset Solutions(2)
Actively Managed	Actively Managed	83.6		59.4		24.2		40.7		Actively Managed	92.7		71.5		21.2		29.7
Passively Managed(1)	Passively Managed(1)	3.2		1.4		1.8		n/m		Passively Managed(1)	4.4		2.0		2.4		116.2
Total Alternatives/Multi-Asset Solutions	Total Alternatives/Multi-Asset Solutions	86.8		60.8		26.0		42.7		Total Alternatives/Multi-Asset Solutions	97.1		73.5		23.6		32.1
Total	Total	$	697.2	$	541.8	$	155.4	28.7	%	Total	$	742.2	$	630.8	$	111.4	17.7	%

(1)Includes index and enhanced index services.

(2)Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as “Other.” In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to “Alternatives and Multi-Asset Solutions."

3231

Index

Changes in assets under management for the three-month, nine-month and twelve-month periods ended ~~March 31,~~September 30, 2021 are as follows:


		Distribution Channel									Distribution Channel
		Institutions		Retail		Private Wealth Management		Total			Institutions		Retail		Private Wealth Management		Total
											(in billions)
Balance as of June 30, 2021										Balance as of June 30, 2021	$	329.1	$	293.7	$	115.6	$	738.4
Long-term flows:										Long-term flows:
Sales/new accounts										Sales/new accounts	2.6		25.6		4.1		32.3
Redemptions/terminations										Redemptions/terminations	(2.9)		(15.0)		(3.6)		(21.5)
Cash flow/unreinvested dividends										Cash flow/unreinvested dividends	0.5		(4.0)		(0.1)		(3.6)
Net long-term inflows										Net long-term inflows	0.2		6.6		0.4		7.2

Market depreciation										Market depreciation	(1.8)		(1.5)		(0.1)		(3.4)
Net change										Net change	(1.6)		5.1		0.3		3.8
Balance as of September 30, 2021										Balance as of September 30, 2021	$	327.5	$	298.8	$	115.9	$	742.2
		(in billions)
Balance as of December 31, 2020	Balance as of December 31, 2020	$	315.6	$	265.3	$	105.0	$	685.9	Balance as of December 31, 2020	$	315.6	$	265.3	$	105.0	$	685.9
Long-term flows:	Long-term flows:									Long-term flows:
Sales/new accounts	Sales/new accounts	4.9		23.0		5.4		33.3		Sales/new accounts	25.1		72.4		13.1		110.6
Redemptions/terminations	Redemptions/terminations	(2.8)		(17.7)		(3.7)		(24.2)		Redemptions/terminations	(19.3)		(48.1)		(10.7)		(78.1)
Cash flow/unreinvested dividends	Cash flow/unreinvested dividends	(1.3)		(2.6)		—		(3.9)		Cash flow/unreinvested dividends	(3.8)		(9.9)		(0.1)		(13.8)
Net long-term inflows		0.8		2.7		1.7		5.2
Net long-term inflows(1)										Net long-term inflows(1)	2.0		14.4		2.3		18.7
Transfers	Transfers	(0.2)		0.2		—		—		Transfers	(0.2)		0.2		—		—
Market appreciation										Market appreciation	10.1		18.9		8.6		37.6
Net change										Net change	11.9		33.5		10.9		56.3
Balance as of September 30, 2021										Balance as of September 30, 2021	$	327.5	$	298.8	$	115.9	$	742.2

Market (depreciation) appreciation		(1.5)		4.1		3.5		6.1
Net change		(0.9)		7.0		5.2		11.3
Balance as of March 31, 2021		$	314.7	$	272.3	$	110.2	$	697.2

Balance as of March 31, 2020		$	256.7	$	198.6	$	86.5	$	541.8
Balance as of September 30, 2020										Balance as of September 30, 2020	$	289.5	$	242.9	$	98.4	$	630.8
Long-term flows:	Long-term flows:									Long-term flows:
Sales/new accounts	Sales/new accounts	31.8		77.8		16.1		125.7		Sales/new accounts	35.0		90.1		16.8		141.9
Redemptions/terminations	Redemptions/terminations	(23.1)		(61.7)		(15.9)		(100.7)		Redemptions/terminations	(21.3)		(63.2)		(15.6)		(100.1)
Cash flow/unreinvested dividends	Cash flow/unreinvested dividends	(7.3)		(9.6)		0.1		(16.8)		Cash flow/unreinvested dividends	(6.8)		(13.1)		—		(19.9)
Net long-term inflows(1)	Net long-term inflows(1)	1.4		6.5		0.3		8.2		Net long-term inflows(1)	6.9		13.8		1.2		21.9

Transfers	Transfers	1.1		(0.3)		(0.8)		—		Transfers	0.5		(0.5)		—		—

Market appreciation	Market appreciation	55.5		67.5		24.2		147.2		Market appreciation	30.6		42.6		16.3		89.5
Net change	Net change	58.0		73.7		23.7		155.4		Net change	38.0		55.9		17.5		111.4
Balance as of March 31, 2021		$	314.7	$	272.3	$	110.2	$	697.2
Balance as of September 30, 2021										Balance as of September 30, 2021	$	327.5	$	298.8	$	115.9	$	742.2

(1)Institutional net flows include ~~$10.8~~$1.3 billion and $2.0 billion of AXA's redemptions of certain low-fee fixed income mandates for the nine-month and twelve-month periods ended ~~March 31, 2021.~~September 30, 2021, respectively.

3332

Index


		Investment Service															Investment Service
		Equity Actively Managed		Equity Passively Managed(1)		Fixed Income Actively Managed - Taxable		Fixed Income Actively Managed - Tax- Exempt		Fixed Income Passively Managed(1)		Alternatives/ Multi-Asset Solutions(2)		Total			Equity Actively Managed		Equity Passively Managed(1)		Fixed Income Actively Managed - Taxable		Fixed Income Actively Managed - Tax- Exempt		Fixed Income Passively Managed(1)		Alternatives/ Multi-Asset Solutions(2)		Total
																	(in billions)
Balance as of June 30, 2021																Balance as of June 30, 2021	$	256.7	$	69.5	$	252.3	$	54.0	$	9.3	$	96.6	$	738.4
Long-term flows:																Long-term flows:
Sales/new accounts																Sales/new accounts	17.2		0.5		8.8		3.3		0.4		2.1		32.3
Redemptions/terminations																Redemptions/terminations	(9.3)		(0.2)		(9.2)		(1.8)		(0.1)		(0.9)		(21.5)
Cash flow/unreinvested dividends																Cash flow/unreinvested dividends	(3.1)		(0.6)		0.5		—		(0.1)		(0.3)		(3.6)
Net long-term inflows (outflows)																Net long-term inflows (outflows)	4.8		(0.3)		0.1		1.5		0.2		0.9		7.2

Market depreciation																Market depreciation	(1.2)		(0.1)		(1.5)		(0.2)		—		(0.4)		(3.4)
Net change																Net change	3.6		(0.4)		(1.4)		1.3		0.2		0.5		3.8
Balance as of September 30, 2021																Balance as of September 30, 2021	$	260.3	$	69.1	$	250.9	$	55.3	$	9.5	$	97.1	$	742.2
		(in billions)
Balance as of December 31, 2020	Balance as of December 31, 2020	$	217.8	$	64.5	$	263.2	$	50.3	$	8.5	$	81.6	$	685.9	Balance as of December 31, 2020	$	217.8	$	64.5	$	263.2	$	50.3	$	8.5	$	81.6	$	685.9
Long-term flows:	Long-term flows:															Long-term flows:
Sales/new accounts	Sales/new accounts	15.6		0.2		12.4		3.4		—		1.7		33.3		Sales/new accounts	51.1		1.1		37.5		9.9		1.2		9.8		110.6
Redemptions/terminations	Redemptions/terminations	(9.3)		(0.6)		(12.2)		(2.0)		(0.1)		—		(24.2)		Redemptions/terminations	(28.4)		(1.0)		(41.3)		(5.6)		(0.3)		(1.5)		(78.1)
Cash flow/unreinvested dividends	Cash flow/unreinvested dividends	(2.6)		(1.6)		(1.0)		0.2		0.3		0.8		(3.9)		Cash flow/unreinvested dividends	(8.6)		(4.1)		(2.1)		0.3		0.4		0.3		(13.8)
Net long-term inflows (outflows)		3.7		(2.0)		(0.8)		1.6		0.2		2.5		5.2
Net long-term inflows (outflows)(3)																Net long-term inflows (outflows)(3)	14.1		(4.0)		(5.9)		4.6		1.3		8.6		18.7

Market appreciation (depreciation)	Market appreciation (depreciation)	10.3		3.8		(10.2)		(0.1)		(0.4)		2.7		6.1		Market appreciation (depreciation)	28.4		8.6		(6.4)		0.4		(0.3)		6.9		37.6
Net change	Net change	14.0		1.8		(11.0)		1.5		(0.2)		5.2		11.3		Net change	42.5		4.6		(12.3)		5.0		1.0		15.5		56.3
Balance as of March 31, 2021		$	231.8	$	66.3	$	252.2	$	51.8	$	8.3	$	86.8	$	697.2
Balance as of September 30, 2021																Balance as of September 30, 2021	$	260.3	$	69.1	$	250.9	$	55.3	$	9.5	$	97.1	$	742.2

Balance as of March 31, 2020		$	141.5	$	47.2	$	236.1	$	45.9	$	10.3	$	60.8	$	541.8
Balance as of September 30, 2020																Balance as of September 30, 2020	$	188.8	$	57.5	$	253.3	$	48.7	$	9.0	$	73.5	$	630.8
Long-term flows:	Long-term flows:															Long-term flows:
Sales/new accounts	Sales/new accounts	54.9		1.4		52.0		10.8		—		6.6		125.7		Sales/new accounts	64.6		1.1		51.1		12.8		1.2		11.1		141.9
Redemptions/terminations	Redemptions/terminations	(36.9)		(2.4)		(50.7)		(8.6)		(0.3)		(1.8)		(100.7)		Redemptions/terminations	(37.9)		(1.1)		(50.6)		(8.0)		(0.4)		(2.1)		(100.1)
Cash flow/unreinvested dividends	Cash flow/unreinvested dividends	(8.3)		(4.4)		(5.4)		0.4		(1.8)		2.7		(16.8)		Cash flow/unreinvested dividends	(11.6)		(4.9)		(4.4)		0.3		(0.1)		0.8		(19.9)
Net long-term inflows (outflows)(3)	Net long-term inflows (outflows)(3)	9.7		(5.4)		(4.1)		2.6		(2.1)		7.5		8.2		Net long-term inflows (outflows)(3)	15.1		(4.9)		(3.9)		5.1		0.7		9.8		21.9

Market appreciation		80.6		24.5		20.2		3.3		0.1		18.5		147.2
Market appreciation (depreciation)																Market appreciation (depreciation)	56.4		16.5		1.5		1.5		(0.2)		13.8		89.5
Net change	Net change	90.3		19.1		16.1		5.9		(2.0)		26.0		155.4		Net change	71.5		11.6		(2.4)		6.6		0.5		23.6		111.4
Balance as of March 31, 2021		$	231.8	$	66.3	$	252.2	$	51.8	$	8.3	$	86.8	$	697.2
Balance as of September 30, 2021																Balance as of September 30, 2021	$	260.3	$	69.1	$	250.9	$	55.3	$	9.5	$	97.1	$	742.2

(1)Includes index and enhanced index services.

(3) Fixed income – taxable investment service net flows include ~~$10.8~~$1.3 billion and $2.0 billion of AXA's redemptions of certain low-fee fixed income mandates for the nine-month and twelve-month periods ended ~~March 31, 2021.~~

September 30, 2021, respectively.

3433

Index

Net long-term inflows (outflows) for actively managed investment services as compared to passively managed investment services for the three-month, nine-month and twelve-month periods ended ~~March 31,~~September 30, 2021 are as follows:


		Periods Ended March 31, 2021		Periods Ended September 30, 2021
		Three-months			Twelve-months			Three-months		Nine-months		Twelve-months
		(in billions)		(in billions)
Actively Managed	Actively Managed						Actively Managed
Equity	Equity	$	3.7		$	9.7	Equity	$	4.8	$	14.1	$	15.1
Fixed Income	Fixed Income	0.8			(1.5)		Fixed Income	1.6		(1.3)		1.2
Alternatives/Multi-Asset Solutions	Alternatives/Multi-Asset Solutions	2.0			6.6		Alternatives/Multi-Asset Solutions	0.3		7.1		8.0
		6.5			14.8			6.7		19.9		24.3
Passively Managed	Passively Managed						Passively Managed
Equity	Equity	(2.0)			(5.4)		Equity	(0.3)		(4.0)		(4.9)
Fixed Income	Fixed Income	0.2			(2.1)		Fixed Income	0.2		1.3		0.7
Alternatives/Multi-Asset Solutions	Alternatives/Multi-Asset Solutions	0.5			0.9		Alternatives/Multi-Asset Solutions	0.6		1.5		1.8
		(1.3)			(6.6)			0.5		(1.2)		(2.4)
Total net long-term inflows	Total net long-term inflows	$	5.2		$	8.2	Total net long-term inflows	$	7.2	$	18.7	$	21.9

Average assets under management by distribution channel and investment service are as follows:


		Three Months Ended March 31,									Three Months Ended September 30,								Nine Months Ended September 30,
		2021		2020		$ Change		% Change					2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
		(in billions)								(in billions)							(in billions)
Distribution Channel:	Distribution Channel:											Distribution Channel:
Institutions	Institutions	$	313.4	$	276.6	$	36.8	13.3	%			Institutions	$	331.1	$	287.4	$	43.7	15.2	%	$	323.3	$	280.9	$	42.4	15.1	%
Retail	Retail	268.0		229.0		39.0		17.1				Retail	299.5		239.8		59.7		24.8		284.1		231.1		53.0		23.0
Private Wealth Management	Private Wealth Management	107.1		96.4		10.7		11.1				Private Wealth Management	116.8		97.1		19.7		20.3		112.4		95.8		16.6		17.3
Total	Total	$	688.5	$	602.0	$	86.5	14.4	%			Total	$	747.4	$	624.3	$	123.1	19.7	%	$	719.8	$	607.8	$	112.0	18.4	%
Investment Service:	Investment Service:											Investment Service:
Equity Actively Managed	Equity Actively Managed	$	223.4	$	164.8	$	58.6	35.5	%			Equity Actively Managed	$	262.8	$	184.4	$	78.4	42.6	%	$	244.2	$	172.4	$	71.8	41.7	%
Equity Passively Managed(1)	Equity Passively Managed(1)	64.6		55.4		9.2		16.6				Equity Passively Managed(1)	70.4		58.0		12.4		21.2		67.8		55.9		11.9		21.3
Fixed Income Actively Managed – Taxable	Fixed Income Actively Managed – Taxable	257.3		256.7		0.6		0.2				Fixed Income Actively Managed – Taxable	252.5		253.0		(0.5)		(0.2)		254.8		253.5		1.3		0.5
Fixed Income Actively Managed – Tax-exempt	Fixed Income Actively Managed – Tax-exempt	51.2		47.7		3.5		7.3				Fixed Income Actively Managed – Tax-exempt	54.9		48.1		6.8		14.0		53.0		47.5		5.5		11.7
Fixed Income Passively Managed(1)	Fixed Income Passively Managed(1)	8.4		9.7		(1.3)		(13.5)				Fixed Income Passively Managed(1)	9.4		9.3		0.1		0.5		8.8		9.6		(0.8)		(8.7)
Alternatives/Multi-Asset Solutions(2)	Alternatives/Multi-Asset Solutions(2)	83.6		67.7		15.9		23.5				Alternatives/Multi-Asset Solutions(2)	97.4		71.5		25.9		36.2		91.2		68.9		22.3		32.4
Total	Total	$	688.5	$	602.0	$	86.5	14.4	%			Total	$	747.4	$	624.3	$	123.1	19.7	%	$	719.8	$	607.8	$	112.0	18.4	%

(1)Includes index and enhanced index services.

(2)Includes certain multi-asset solutions and services not included in equity of fixed income services. Prior to December 31, 2020, this investment service line was disclosed as “Other.” In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to “Alternatives and Multi-Asset Solutions."

Our Institutional channel ~~first~~third quarter average AUM of ~~$313.4~~$331.1 billion increased ~~$36.8~~$43.7 billion, or ~~13.3%~~15.2%, compared to the ~~first~~third quarter of 2020, primarily due to this AUM increasing ~~$58.0~~$38.0 billion, or ~~22.6%~~13.1%, to ~~$314.7~~$327.5 billion over the last twelve months. The ~~$58.0~~$38.0 billion increase primarily resulted from market appreciation of ~~$55.5~~$30.6 billion and net inflows of ~~$1.4~~$6.9 billion.

Index

Our Retail channel ~~first~~third quarter average AUM of ~~$268.0~~$299.5 billion increased ~~$39.0~~$59.7 billion, or ~~17.1%~~24.8%, compared to the ~~first~~third quarter of 2020, primarily due to this AUM increasing ~~$73.7~~$55.9 billion, or ~~37.1%~~23.0%, to ~~$272.3~~$298.8 billion over the last twelve months. The ~~$73.7~~$55.9 billion increase primarily resulted from market appreciation of ~~$67.5~~$42.6 billion and net inflows of ~~$6.5~~$13.8 billion.

Our Private Wealth Management channel ~~first~~third quarter average AUM of ~~$107.1~~$116.8 billion increased ~~$10.7~~$19.7 billion, or ~~11.1%~~20.3%, compared to the ~~first~~third quarter of 2020, primarily due to this AUM increasing ~~$23.7~~$17.5 billion, or ~~27.3%~~17.7%, to ~~$110.2~~$115.9 billion over the

~~Index~~

last twelve months. The ~~$23.7~~$17.5 billion increase primarily resulted from market appreciation of ~~$24.2~~$16.3 billion and net inflows of ~~$0.3~~$1.2 billion.

Furthermore, regarding each of our three client channels described above, our AUM declined precipitously during March 2020 resulting from the adverse market reaction to the onset of the COVID-19 pandemic.

Absolute investment composite returns, gross of fees, and relative performance as of ~~March 31,~~September 30, 2021 compared to benchmarks for certain representative Institutional equity and fixed income services are as follows:


		1-Year		3-Year(1)		5-Year(1)			1-Year		3-Year(1)		5-Year(1)

Global High Income - Hedged (fixed income)	Global High Income - Hedged (fixed income)							Global High Income - Hedged (fixed income)
Absolute return	Absolute return	27.4	%	4.6	%	7.0	%	Absolute return	13.0	%	6.1	%	5.9	%
Relative return (vs. Bloomberg Barclays Global High Yield Index - Hedged)	Relative return (vs. Bloomberg Barclays Global High Yield Index - Hedged)	3.9		(0.8)		(0.1)		Relative return (vs. Bloomberg Barclays Global High Yield Index - Hedged)	3.1		—		0.3
Global Plus - Hedged (fixed income)	Global Plus - Hedged (fixed income)							Global Plus - Hedged (fixed income)
Absolute return	Absolute return	6.2		4.5		3.9		Absolute return	1.5		5.1		3.4
Relative return (vs. Bloomberg Barclays Global Aggregate Index - Hedged)	Relative return (vs. Bloomberg Barclays Global Aggregate Index - Hedged)	4.7		0.1		0.6		Relative return (vs. Bloomberg Barclays Global Aggregate Index - Hedged)	2.1		0.5		0.5
Intermediate Municipal Bonds (fixed income)	Intermediate Municipal Bonds (fixed income)							Intermediate Municipal Bonds (fixed income)
Absolute return	Absolute return	6.5		4.2		2.9		Absolute return	3.3		4.3		2.8
Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg)	Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg)	2.2		1.0		0.7		Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg)	1.5		1.0		0.7
U.S. Strategic Core Plus (fixed income)	U.S. Strategic Core Plus (fixed income)							U.S. Strategic Core Plus (fixed income)
Absolute return	Absolute return	4.9		5.1		4.0		Absolute return	0.5		5.9		3.6
Relative return (vs. Bloomberg Barclays U.S. Aggregate Index)	Relative return (vs. Bloomberg Barclays U.S. Aggregate Index)	4.2		0.5		0.9		Relative return (vs. Bloomberg Barclays U.S. Aggregate Index)	1.4		0.5		0.7
Emerging Market Debt (fixed income)	Emerging Market Debt (fixed income)							Emerging Market Debt (fixed income)
Absolute return	Absolute return	21.8		3.8		5.8		Absolute return	6.3		6.7		4.4
Relative return (vs. JPM EMBI Global/JPM EMBI)	Relative return (vs. JPM EMBI Global/JPM EMBI)	7.5		(0.1)		1.0		Relative return (vs. JPM EMBI Global/JPM EMBI)	2.4		1.0		0.8
Sustainable Global Thematic (equity)	Sustainable Global Thematic (equity)							Sustainable Global Thematic (equity)
Absolute return	Absolute return	72.4		20.2		19.6		Absolute return	29.4		22.5		20.0
Relative return (vs. MSCI ACWI Index)	Relative return (vs. MSCI ACWI Index)	17.8		8.1		6.4		Relative return (vs. MSCI ACWI Index)	2.0		9.9		6.8
International Strategic Core Equity (equity)	International Strategic Core Equity (equity)							International Strategic Core Equity (equity)
Absolute return	Absolute return	32.3		4.8		8.0		Absolute return	17.6		6.3		8.5
Relative return (vs. MSCI EAFE Index)	Relative return (vs. MSCI EAFE Index)	(12.2)		(1.2)		(0.8)		Relative return (vs. MSCI EAFE Index)	(8.1)		(1.3)		(0.3)
U.S. Small & Mid Cap Value (equity)	U.S. Small & Mid Cap Value (equity)							U.S. Small & Mid Cap Value (equity)
Absolute return	Absolute return	98.6		10.5		12.6		Absolute return	64.2		9.6		11.6
Relative return (vs. Russell 2500 Value Index)	Relative return (vs. Russell 2500 Value Index)	11.1		(0.4)		0.5		Relative return (vs. Russell 2500 Value Index)	9.8		0.7		1.1
U.S. Strategic Value (equity)	U.S. Strategic Value (equity)							U.S. Strategic Value (equity)
Absolute return	Absolute return	63.1		8.4		9.4		Absolute return	40.4		8.0		9.4
Relative return (vs. Russell 1000 Value Index)	Relative return (vs. Russell 1000 Value Index)	7.0		(2.5)		(2.3)		Relative return (vs. Russell 1000 Value Index)	5.4		(2.1)		(1.6)
U.S. Small Cap Growth (equity)	U.S. Small Cap Growth (equity)							U.S. Small Cap Growth (equity)
Absolute return	Absolute return	98.1		27.9		28.5		Absolute return	37.5		21.6		26.5
Relative return (vs. Russell 2000 Growth Index)	Relative return (vs. Russell 2000 Growth Index)	7.9		10.8		9.9		Relative return (vs. Russell 2000 Growth Index)	4.3		10.0		11.1
U.S. Large Cap Growth (equity)	U.S. Large Cap Growth (equity)							U.S. Large Cap Growth (equity)
Absolute return	Absolute return	54.1		23.0		21.5		Absolute return	28.5		23.1		23.4
Relative return (vs. Russell 1000 Growth Index)	Relative return (vs. Russell 1000 Growth Index)	(8.7)		0.2		0.5		Relative return (vs. Russell 1000 Growth Index)	1.2		1.1		0.6

3635

Index


		1-Year	3-Year(1)	5-Year(1)		1-Year	3-Year(1)	5-Year(1)
U.S. Small & Mid Cap Growth (equity)	U.S. Small & Mid Cap Growth (equity)				U.S. Small & Mid Cap Growth (equity)
Absolute return	Absolute return	86.3	23.3	24.1	Absolute return	32.9	19.6	23.7
Relative return (vs. Russell 2500 Growth Index)	Relative return (vs. Russell 2500 Growth Index)	(1.2)	3.4	4.2	Relative return (vs. Russell 2500 Growth Index)	0.9	3.6	5.5
Concentrated U.S. Growth (equity)	Concentrated U.S. Growth (equity)				Concentrated U.S. Growth (equity)
Absolute return	Absolute return	61.2	22.2	20.5	Absolute return	32.4	20.8	21.2
Relative return (vs. S&P 500 Index)	Relative return (vs. S&P 500 Index)	4.8	5.4	4.2	Relative return (vs. S&P 500 Index)	2.4	4.8	4.3
Select U.S. Equity (equity)	Select U.S. Equity (equity)				Select U.S. Equity (equity)
Absolute return	Absolute return	56.9	16.5	16.7	Absolute return	32.2	15.9	17.4
Relative return (vs. S&P 500 Index)	Relative return (vs. S&P 500 Index)	0.6	(0.3)	0.4	Relative return (vs. S&P 500 Index)	2.1	(0.1)	0.5
Strategic Equities (equity)	Strategic Equities (equity)				Strategic Equities (equity)
Absolute return	Absolute return	57.3	15.5	14.2	Absolute return	31.9	14.7	15.1
Relative return (vs. Russell 3000 Index)	Relative return (vs. Russell 3000 Index)	(5.2)	(1.6)	(2.4)	Relative return (vs. Russell 3000 Index)	0.1	(1.3)	(1.7)
Global Core Equity (equity)	Global Core Equity (equity)				Global Core Equity (equity)
Absolute return	Absolute return	49.9	13.0	14.7	Absolute return	28.1	13.2	14.3
Relative return (vs. MSCI ACWI Index)	Relative return (vs. MSCI ACWI Index)	(4.7)	0.9	1.5	Relative return (vs. MSCI ACWI Index)	0.7	0.6	1.1
U.S. Strategic Core Equity (equity)	U.S. Strategic Core Equity (equity)				U.S. Strategic Core Equity (equity)
Absolute return	Absolute return	39.9	14.1	12.4	Absolute return	23.1	13.5	13.7
Relative return (vs. S&P 500 Index)	Relative return (vs. S&P 500 Index)	(16.4)	(2.7)	(3.9)	Relative return (vs. S&P 500 Index)	(6.9)	(2.5)	(3.1)
Select U.S. Equity Long/Short (alternatives)	Select U.S. Equity Long/Short (alternatives)				Select U.S. Equity Long/Short (alternatives)
Absolute return	Absolute return	31.5	11.8	11.2	Absolute return	19.3	10.8	11.6
Relative return (vs. S&P 500 Index)	Relative return (vs. S&P 500 Index)	(24.8)	(4.9)	(5.1)	Relative return (vs. S&P 500 Index)	(10.8)	(5.2)	(5.3)

(1)Reflects annualized returns.

3736

Index

Consolidated Results of Operations


		Three Months Ended March 31,										Three Months Ended September 30,										Nine Months Ended September 30,
		2021			2020			$ Change		% Change				2021			2020			$ Change		% Change		2021			2020			$ Change		% Change
		(in thousands, except per unit amounts)												(in thousands, except per unit amounts)
Net revenues	Net revenues	$	1,007,266		$	874,156		$	133,110	15.2	%		Net revenues	$	1,092,832		$	900,038		$	192,794	21.4	%	$	3,176,920		$	2,645,643		$	531,277	20.1	%
Expenses	Expenses	746,682			695,933			50,749		7.3			Expenses	813,182			682,892			130,290		19.1		2,353,063			2,040,627			312,436		15.3
Operating income	Operating income	260,584			178,223			82,361		46.2			Operating income	279,650			217,146			62,504		28.8		823,857			605,016			218,841		36.2
Income taxes	Income taxes	16,745			9,474			7,271		76.7			Income taxes	16,029			9,089			6,940		76.4		45,254			29,949			15,305		51.1
Net income	Net income	243,839			168,749			75,090		44.5			Net income	263,621			208,057			55,564		26.7		778,603			575,067			203,536		35.4
Net (loss) of consolidated entities attributable to non-controlling interests		(292)			(25,571)			25,279		(98.9)
Net (loss) income of consolidated entities attributable to non-controlling interests													Net (loss) income of consolidated entities attributable to non-controlling interests	(1,074)			81			(1,155)		n/m		2,207			(4,550)			6,757		n/m
Net income attributable to AB Unitholders	Net income attributable to AB Unitholders	$	244,131		$	194,320		$	49,811	25.6			Net income attributable to AB Unitholders	$	264,695		$	207,976		$	56,719	27.3		$	776,396		$	579,617		$	196,779	33.9

Diluted net income per AB Unit	Diluted net income per AB Unit	$	0.89		$	0.71		$	0.18	25.4			Diluted net income per AB Unit	$	0.96		$	0.77		$	0.19	24.7		$	2.82		$	2.13		$	0.69	32.4

Distributions per AB Unit	Distributions per AB Unit	$	0.88		$	0.71		$	0.17	23.9			Distributions per AB Unit	$	0.96		$	0.76		$	0.20	26.3		$	2.81		$	2.15		$	0.66	30.7

Operating margin (1)	Operating margin (1)	25.9		%	23.3		%						Operating margin (1)	25.7		%	24.1		%					25.9		%	23.0		%

(1)Operating income excluding net income (loss) attributable to non-controlling interests as a percentage of net revenues.

Net income attributable to AB Unitholders for the three months ended ~~March 31,~~September 30, 2021 increased ~~$49.8~~$56.7 million, or ~~25.6%~~27.3%, from the three months ended ~~March 31,~~September 30, 2020. The increase is primarily is due to (in millions):


Higher investment advisory base ~~advisory~~ fees	$	~~74.1~~
~~Higher investment gains~~	~~46.2~~134.9
Higher distribution revenues	~~16.7~~34.9
Higher Bernstein Research Services revenue	14.8
Higher performance-based fees	~~7.6~~11.3
Lower amortization of intangible assets	~~5.0~~5.3
~~Lower general and administrative expenses~~Higher net loss of consolidated entities attributable to non-controlling interest	~~2.0~~1.2
Higher employee compensation and benefits expense	~~(43.8)~~(76.1)
Higher promotion and servicing expense	(46.5)
Higher general and administrative expenses	(12.7)
Higher income tax expense	(6.9)
Higher investment losses	(3.8)
Other	0.3
	$	56.7

Index

Net income attributable to AB Unitholders for the nine months ended September 30, 2021 increased $196.8 million, or 33.9%, from the nine months ended September 30, 2020. The increase is primarily due to (in millions):


Higher investment advisory base fees	$	363.5
Higher distribution revenues	87.1
Higher performance-based fees	64.0
Higher investment gains	22.4
Lower amortization of intangible assets	15.5
Higher employee compensation and benefits expense	(206.0)
Higher promotion and servicing expense	(108.1)
Higher income tax expense	(15.3)
Higher general and administrative expenses	(15.1)
Higher net income of consolidated entities attributable to non-controlling interest	~~(25.3)~~
~~Higher promotion and servicing expense~~	~~(15.6)~~(6.8)
Lower Bernstein Research Services revenue	~~(10.2)~~
~~Higher income tax expense~~	~~(7.3)~~(3.3)
Other	~~0.4~~ (1.1)
	$	~~49.8~~196.8

Units Outstanding

Each quarter, we consider whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Exchange Act. A plan of this type allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed trading blackout periods or because it possesses material non-public information. Each broker we select has the authority under the terms and limitations specified in the plan to repurchase AB Holding Units on our behalf. Repurchases are subject to regulations promulgated by the SEC, as well as certain price, market volume and timing constraints specified in the plan. The plan adopted during the ~~first~~third quarter of 2021 expired at the close of business on ~~April 28,~~October 27, 2021. We may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program and for other corporate purposes.

~~Index~~

Cash Distributions

We are required to distribute all of our Available Cash Flow, as defined in the AB Partnership Agreement, to our Unitholders and the General Partner. Available Cash Flow typically is the adjusted diluted net income per unit for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. In future periods, management anticipates that Available Cash Flow will continue to be based on adjusted diluted net income per unit, unless management determines, with concurrence of the Board of Directors, that one or more adjustments that are made for adjusted net income should not be made with respect to the Available Cash Flow calculation. See Note 6 to our consolidated financial statements contained in Item 1 for a description of Available Cash Flow.

Management Operating Metrics

We are providing the non-GAAP measures “adjusted net revenues,” “adjusted operating income” and “adjusted operating margin” because they are the principal operating metrics management uses in evaluating and comparing period-to-period operating performance. Management principally uses these metrics in evaluating performance because they present a clearer picture of our operating performance and allow management to see long-term trends without the distortion primarily caused by long-term incentive compensation-related mark-to-market adjustments, real estate charges and other adjustment items. Similarly, we believe that these management operating metrics help investors better understand the underlying trends in our results and, accordingly, provide a valuable perspective for investors.

These non-GAAP measures are provided in addition to, and not as substitutes for, net revenues, operating income and operating

margin, and they may not be comparable to non-GAAP measures presented by other companies. Management uses both accounting principles generally accepted in the United States of America ("US GAAP") and non-GAAP measures in evaluating our financial performance. The non-GAAP measures alone may pose limitations because they do not include all of our revenues and expenses.

Three Months Ended March 31,
2021 2020
(in thousands, except per unit amounts)
Net revenues, US GAAP basis $ 1,007,266 $ 874,156
Adjustments:
Distribution-related adjustments:
Distribution revenues (147,600) (130,857)
Investment advisory services fees (22,553) (14,814)
Pass-through adjustments:
Investment advisory services fees (4,196) (7,062)
Other revenues (10,531) (9,607)
Impact of consolidated company-sponsored funds (311) 24,135
Long-term incentive compensation-related investment gains and dividend and interest (2,097) 6,993
Write-down of investment — 859
Adjusted net revenues $ 819,978 $ 743,803

3938

Index


		Three Months Ended March 31,						Three Months Ended September 30,					Nine Months Ended September 30,
		2021			2020					2021			2020			2021			2020
										(in thousands, except per unit amounts)
Net revenues, US GAAP basis									Net revenues, US GAAP basis	$	1,092,832		$	900,038		$	3,176,920		$	2,645,643
Adjustments:									Adjustments:
Distribution-related adjustments:									Distribution-related adjustments:
Distribution revenues									Distribution revenues	(170,612)			(135,693)			(473,750)			(386,649)
Investment advisory services fees									Investment advisory services fees	(25,530)			(20,120)			(68,542)			(47,136)
Pass-through adjustments:									Pass-through adjustments:
Investment advisory services fees									Investment advisory services fees	(4,017)			(3,888)			(12,615)			(11,599)
Other revenues									Other revenues	(9,359)			(9,344)			(28,119)			(31,828)
Impact of consolidated company-sponsored funds									Impact of consolidated company-sponsored funds	968			(765)			(3,629)			1,818
Long-term incentive compensation-related investment gains and dividend and interest									Long-term incentive compensation-related investment gains and dividend and interest	(684)			(3,231)			(5,055)			(1,583)
Write-down of investment									Write-down of investment	—			—			—			859

Adjusted net revenues									Adjusted net revenues	$	883,598		$	726,997		$	2,585,210		$	2,169,525
		(in thousands, except per unit amounts)
Operating income, US GAAP basis	Operating income, US GAAP basis	$	260,584		$	178,223			Operating income, US GAAP basis	$	279,650		$	217,146		$	823,857		$	605,016
Adjustments:	Adjustments:								Adjustments:
Real estate	Real estate	(985)			(339)				Real estate	(985)			(985)			(2,956)			3,865
Long-term incentive compensation-related items	Long-term incentive compensation-related items	6			566				Long-term incentive compensation-related items	220			(416)			135			253
CEO's EQH award compensation		142			184
EQH award compensation									EQH award compensation	540			205			700			598
Write-down of investment	Write-down of investment	—			859				Write-down of investment	—			—			—			859
Acquisition-related expenses	Acquisition-related expenses	22			526				Acquisition-related expenses	217			356			419			1,687

Sub-total of non-GAAP adjustments	Sub-total of non-GAAP adjustments	(815)			1,796				Sub-total of non-GAAP adjustments	(8)			(840)			(1,702)			7,262
Less: Net (loss) of consolidated entities attributable to non-controlling interests		(292)			(25,571)
Less: Net (loss) income of consolidated entities attributable to non-controlling interests									Less: Net (loss) income of consolidated entities attributable to non-controlling interests	(1,074)			81			2,207			(4,550)
Adjusted operating income	Adjusted operating income	260,061			205,590				Adjusted operating income	280,716			216,225			819,948			616,828
Adjusted income taxes	Adjusted income taxes	16,722			10,362				Adjusted income taxes	16,085			9,060			45,015			30,533
Adjusted net income	Adjusted net income	$	243,339		$	195,228			Adjusted net income	$	264,631		$	207,165		$	774,933		$	586,295

Diluted net income per AB Unit, GAAP basis	Diluted net income per AB Unit, GAAP basis	$	0.89		$	0.71			Diluted net income per AB Unit, GAAP basis	$	0.96		$	0.77		$	2.82		$	2.13
Impact of non-GAAP adjustments	Impact of non-GAAP adjustments	(0.01)			—				Impact of non-GAAP adjustments	—			(0.01)			—			0.02
Adjusted diluted net income per AB Unit	Adjusted diluted net income per AB Unit	$	0.88		$	0.71			Adjusted diluted net income per AB Unit	$	0.96		$	0.76		$	2.82		$	2.15

Operating margin, GAAP basis	Operating margin, GAAP basis	25.9		%	23.3		%		Operating margin, GAAP basis	25.7		%	24.1		%	25.9		%	23.0		%
Impact of non-GAAP adjustments	Impact of non-GAAP adjustments	5.8			4.3				Impact of non-GAAP adjustments	6.1			5.6			5.8			5.4
Adjusted operating margin	Adjusted operating margin	31.7		%	27.6		%		Adjusted operating margin	31.8		%	29.7		%	31.7		%	28.4		%

Adjusted operating income for the three months ended ~~March 31,~~September 30, 2021 increased ~~$54.5~~$64.5 million, or ~~26.5%~~29.8%, from the three months ended ~~March 31,~~September 30, 2020, primarily due to higher investment advisory base fees of ~~$66.5~~$129.4 million, higher Bernstein Research Services revenues of $14.8 million, higher performance-based fees of ~~$10.3 million, lower promotion and servicing expenses of $9.9 million, higher net investment gains of $9.1~~$11.3 million and lower amortization of intangible assets of ~~$5.0~~$5.3 million, partially offset by higher employee compensation and benefits expense (excluding the impact of long-term incentive compensation-related items) of ~~$35.5~~$77.7 million, higher general and administrative expenses of $13.3 million and higher promotion and servicing expenses of $6.2 million.

Adjusted operating income for the nine months ended September 30, 2021 increased $203.1 million, or 32.9%, from the nine months ended September 30, 2020, primarily due to higher investment advisory base fees of $340.7 million, higher performance-based fees of $66.6 million, lower amortization of intangible assets of $15.5 million and higher net investment gains of $8.5 million, partially offset by higher employee compensation and benefits expense (excluding the impact of long-term incentive compensation-related items) of $202.9 million, higher general and administrative expenses of $25.7 million and lower Bernstein Research Services revenues of ~~$10.2 million and higher general and administrative expenses of $2.6~~$3.3 million.

Index

Adjusted Net Revenues

Net Revenue, as adjusted, is reduced to exclude all of the company's distribution revenues, which are recorded as a separate line

item on the consolidated statement of income, as well as a portion of investment advisory services fees received that is used to pay distribution and servicing costs. For certain products, based on the distinct arrangements, certain distribution fees are collected by us and passed through to third-party client intermediaries, while for certain other products, we collect investment advisory services fees and a portion is passed through to third-party client intermediaries. In both arrangements, the third-party client intermediary owns the relationship with the client and is responsible for performing services and distributing the product to the client on our behalf. We believe offsetting distribution revenues and certain investment advisory services fees is useful for our investors and other users of our financial statements because such presentation appropriately reflects the nature of these costs as pass-through payments to third parties that perform functions on behalf of our sponsored mutual funds and/or shareholders of these funds. Distribution-related adjustments fluctuate each period based on the type of investment products sold, as well as the average AUM over the period. Also, we adjust distribution revenues for the amortization of deferred sales commissions as these costs, over time, will offset such revenues.

We adjust investment advisory and services fees and other revenues for pass through costs, primarily related to our transfer agent and shareholder servicing fees. These fees do not affect operating income, but they do affect our operating margin. As such, we exclude these fees from adjusted net revenues.

We adjust for the revenue impact of consolidating company-sponsored investment funds by eliminating the consolidated company-sponsored investment funds' revenues and including AB's fees from such consolidated company-sponsored investment funds and AB's investment gains and losses on its investments in such consolidated company-sponsored investment funds that were eliminated in consolidation.

~~Index~~

Also, adjusted net revenues exclude investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments.

Lastly, during the first quarter of 2020, we wrote-off an investment that had been received in exchange for the sale of software technology, bringing the balance to zero. Previously, we had been excluding the value of this investment from adjusted net revenues.

Adjusted Operating Income

Adjusted operating income represents operating income on a US GAAP basis excluding (1) real estate charges (credits), (2) the impact on net revenues and compensation expense of the investment gains and losses (as well as the dividends and interest) associated with employee long-term incentive compensation-related investments, (3) our ~~CEO's~~senior management's EQH award compensation, as discussed below, (4) the write-down of an investment (discussed immediately above), (5) acquisition-related expenses, and (6) the impact of consolidated company-sponsored investment funds.

Real estate charges (credits) incurred have been excluded because they are not considered part of our core operating results when comparing financial results from period to period and to industry peers. Real estate charges (credits) incurred during the fourth quarter of 2019 through the fourth quarter of 2020, while excluded in the period in which the charges (credits) were recorded, are included ratably over the remaining applicable lease term.

Prior to 2009, a significant portion of employee compensation was in the form of long-term incentive compensation awards that were notionally invested in AB investment services and generally vested over a period of four years. AB economically hedged the exposure to market movements by purchasing and holding these investments on its balance sheet. All such investments had vested as of year-end 2012 and the investments have been delivered to the participants, except for those investments with respect to which the participant elected a long-term deferral. Fluctuation in the value of these investments, which also impacts compensation expense, is recorded within investment gains and losses on the income statement. Management believes it is useful to reflect the offset achieved from economically hedging the market exposure of these investments in the calculation of adjusted operating income and adjusted operating margin. The non-GAAP measures exclude gains and losses and dividends and interest on employee long-term incentive compensation-related investments included in revenues and compensation expense.

Index

The board of directors of EQH granted to Seth P. Bernstein, ~~(“CEO”),~~ our ~~President and Chief Executive Officer,~~CEO, equity awards in connection with EQH's ~~IPO~~IPO. Additionally, equity awards were granted to Mr. Bernstein and ~~Mr. Bernstein's~~other members of AB's senior management for their membership on the EQH Management Committee. ~~Mr. Bernstein~~These individuals may receive additional equity or cash compensation from EQH in the future related to ~~his~~their service on the Management Committee. Any awards granted to ~~Mr. Bernstein~~these individuals by EQH are recorded as compensation expense in AB’s consolidated statement of income. The compensation expense associated with these awards has been excluded from our non-GAAP measures because they are non-cash and are based upon EQH's, and not AB's, financial performance.

The write-off of the investment discussed above in Adjusted ~~net revenues~~Net Revenues has been excluded due to its non-recurring nature and because it is not part of our core operating results.

Acquisition-related expenses have been excluded because they are not considered part of our core operating results when comparing financial results from period to period and to industry peers.

We adjusted for the operating income impact of consolidating certain company-sponsored investment funds by eliminating the consolidated company-sponsored funds' revenues and expenses and including AB's revenues and expenses that were eliminated in consolidation. We also excluded the limited partner interests we do not own.

Adjusted Net Income and Adjusted Diluted Net Income per AB Unit

As previously discussed, our quarterly distribution is typically our adjusted diluted net income per unit (which is derived from adjusted net income) for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. Adjusted income taxes, used in calculating adjusted net income, are calculated using the GAAP effective tax rate adjusted for non-GAAP income tax adjustments.

~~Index~~

Adjusted Operating Margin

Adjusted operating margin allows us to monitor our financial performance and efficiency from period to period without the volatility noted above in our discussion of adjusted operating income and to compare our performance to industry peers on a basis that better reflects our performance in our core business. Adjusted operating margin is derived by dividing adjusted operating income by adjusted net revenues.

Index

Net Revenues

The components of net revenues are as follows:


		Three Months Ended March 31,									Three Months Ended September 30,								Nine Months Ended September 30,
		2021		2020		$ Change		% Change					2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
		(in thousands)								(in thousands)							(in thousands)
Investment advisory and services fees:	Investment advisory and services fees:											Investment advisory and services fees:
Institutions:	Institutions:											Institutions:
Base fees	Base fees	$	129,430	$	110,363	$	19,067	17.3	%			Base fees	$	136,076	$	115,581	$	20,495	17.7	%	$	402,176	$	335,225	$	66,951	20.0	%
Performance-based fees	Performance-based fees	4,430		2,290		2,140		93.4				Performance-based fees	2,993		4,181		(1,188)		(28.4)		9,907		7,169		2,738		38.2
		133,860		112,653		21,207		18.8					139,069		119,762		19,307		16.1		412,083		342,394		69,689		20.4
Retail:	Retail:											Retail:
Base fees	Base fees	330,397		296,371		34,026		11.5				Base fees	374,975		299,486		75,489		25.2		1,052,961		867,676		185,285		21.4
Performance-based fees	Performance-based fees	2,965		749		2,216		n/m				Performance-based fees	334		1,360		(1,026)		(75.4)		34,810		9,290		25,520		n/m
		333,362		297,120		36,242		12.2					375,309		300,846		74,463		24.8		1,087,771		876,966		210,805		24.0
Private Wealth Management:	Private Wealth Management:											Private Wealth Management:
Base fees	Base fees	227,864		206,853		21,011		10.2				Base fees	247,473		208,526		38,947		18.7		714,795		603,575		111,220		18.4
Performance-based fees	Performance-based fees	8,380		5,099		3,281		64.3				Performance-based fees	14,946		1,405		13,541		n/m		43,238		7,532		35,706		n/m
		236,244		211,952		24,292		11.5					262,419		209,931		52,488		25.0		758,033		611,107		146,926		24.0
Total:	Total:											Total:
Base fees	Base fees	687,691		613,587		74,104		12.1				Base fees	758,524		623,593		134,931		21.6		2,169,932		1,806,476		363,456		20.1
Performance-based fees	Performance-based fees	15,775		8,138		7,637		93.8				Performance-based fees	18,273		6,946		11,327		163.1		87,955		23,991		63,964		n/m
		703,466		621,725		81,741		13.1					776,797		630,539		146,258		23.2		2,257,887		1,830,467		427,420		23.4

Bernstein Research Services	Bernstein Research Services	119,021		129,223		(10,202)		(7.9)				Bernstein Research Services	113,340		98,514		14,826		15.0		338,016		341,346		(3,330)		(1.0)
Distribution revenues	Distribution revenues	147,600		130,857		16,743		12.8				Distribution revenues	170,612		135,693		34,919		25.7		473,750		386,649		87,101		22.5
Dividend and interest income	Dividend and interest income	8,684		20,465		(11,781)		(57.6)				Dividend and interest income	8,794		9,070		(276)		(3.0)		26,136		42,227		(16,091)		(38.1)
Investment gains (losses)		1,928		(44,306)		46,234		n/m
Investment (losses) gains												Investment (losses) gains	(2,724)		1,106		(3,830)		n/m		3,385		(19,011)		22,396		n/m
Other revenues	Other revenues	27,711		25,511		2,200		8.6				Other revenues	26,973		26,583		390		1.5		80,584		78,186		2,398		3.1
Total revenues	Total revenues	1,008,410		883,475		124,935		14.1				Total revenues	1,093,792		901,505		192,287		21.3		3,179,758		2,659,864		519,894		19.5
Less: Interest expense	Less: Interest expense	1,144		9,319		(8,175)		(87.7)				Less: Interest expense	960		1,467		(507)		(34.6)		2,838		14,221		(11,383)		(80.0)
Net revenues	Net revenues	$	1,007,266	$	874,156	$	133,110	15.2				Net revenues	$	1,092,832	$	900,038	$	192,794	21.4		$	3,176,920	$	2,645,643	$	531,277	20.1

Investment Advisory and Services Fees

Investment advisory and services fees are the largest component of our revenues. These fees generally are calculated as a percentage of the value of AUM as of a specified date, or as a percentage of the value of average AUM for the applicable billing period, and vary with the type of investment service, the size of account and the total amount of assets we manage for a particular client. Accordingly, fee income generally increases or decreases as AUM increase or decrease and is affected by market appreciation or depreciation, the addition of new client accounts or client contributions of additional assets to existing accounts, withdrawals of assets from and termination of client accounts, purchases and redemptions of mutual fund shares, shifts of assets between accounts or products with different fee structures, and acquisitions. Our average basis points realized (investment advisory and services fees divided by average AUM) generally approximate 30 to ~~110~~105 basis points for actively-managed equity services, 10 to 70 basis points for actively-managed fixed income services and 2 to 20 basis points for

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passively-managed services. Average basis points realized for other services could range from 4 basis points for certain Institutional third party managed services to over 100 basis points for certain Retail and Private Wealth Management alternative services. These ranges include all-inclusive fee arrangements (covering investment management, trade execution and other services) for our Private Wealth Management clients.

We calculate AUM using established market-based valuation methods and fair valuation (non-observable market) methods. Market-based valuation methods include: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognized pricing vendors for fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps; and quoted bids or spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include: discounted cash flow models or any other methodology that is validated and approved by our Valuation Committee (see paragraph immediately below for more information regarding our Valuation Committee). Fair valuation methods are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities.

The Valuation Committee, which consists of senior officers and employees, is responsible for overseeing the pricing and valuation of all investments held in client and AB portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply to pricing and valuing investments held in these portfolios. We also have a Pricing Group, which reports to the Valuation Committee and is responsible for overseeing the pricing process for all investments.

We sometimes charge our clients performance-based fees. In these situations, we charge a base advisory fee and are eligible to earn an additional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client account underperforms relative to its performance target (whether absolute or relative to a specified benchmark), it must gain back such underperformance before we can collect future performance-based fees. Therefore, if we fail to achieve our performance target for a particular period, we will not earn a performance-based fee for that period and, for accounts with a high-watermark provision, our ability to earn future performance-based fees will be impaired. We are eligible to earn performance-based fees on ~~5.6%~~6.3%, 8.8% and ~~0.8%~~0.7% of the assets we manage for institutional clients, private wealth clients and retail clients, respectively (in total, ~~4.2%~~4.4% of our AUM).

For the three months ended ~~March 31,~~September 30, 2021, our investment advisory and services fees increased by ~~$81.7~~$146.3 million, or ~~13.1%~~23.2%, from the three months ended ~~March 31,~~September 30, 2020, due to a ~~$74.1~~$134.9 million, or ~~12.1%~~21.6%, increase in base fees and a ~~$7.6~~$11.3 million increase in performance-based fees. The increase in base fees is primarily due to a ~~14.4%~~19.7% increase in average AUM. For the nine months ended September 30, 2021, our investment advisory and services fees increased by $427.4 million, or 23.4%, from the nine months ended September 30, 2020, due to a $363.5 million, or 20.1%, increase in base fees and a $64.0 million increase in performance-based fees. The increase in base fees is primarily due to an 18.4% increase in average AUM.

Institutional investment advisory and services fees for the three months ended ~~March 31,~~September 30, 2021 increased by ~~$21.2~~$19.3 million, or ~~18.8%~~16.1%, from the three months ended ~~March 31,~~September 30, 2020, due to a ~~$19.1~~$20.5 million, or ~~17.3%~~17.7%, increase in base fees and a ~~$2.1~~$1.2 million ~~increase~~decrease in performance-based fees. The increase in base fees is primarily due a ~~13.3%~~15.2% increase in average ~~AUM, as well as a higher portfolio fee rate.~~

~~Retail~~AUM. Institutional investment advisory and ~~services~~service fees for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 increased by ~~$36.2~~$69.7 million, or ~~12.2%~~20.4%, from the ~~three~~nine months ended ~~March 31,~~September 30, 2020, due to a ~~$34.0~~$67.0 million, or ~~11.5%~~20.0%, increase in base fees and a ~~$2.2~~$2.7 million increase in performance-based fees. The increase in base fees is primarily due to a ~~17.1%~~15.1% increase in average AUM, ~~partially offset~~as well as a shift in product mix to active equities, which generally have higher fees.

Retail investment advisory and services fees for the three months ended September 30, 2021 increased by $74.5 million, or 24.8%, from the three months ended September 30, 2020, due to a ~~lower portfolio fee rate.~~$75.5 million, or 25.2% increase in base fees and a $1.0 million decrease in performance-based fees. The increase in base fees is primarily due to a 24.8% increase in average AUM. Retail investment advisory and service fees for the nine months ended September 30, 2021 increased by $210.8 million, or 24.0%, from the nine months ended September 30, 2020, primarily due to an increase in base fees of $185.3 million, or 21.4% and a $25.5 million increase in performance-based fees. The increase in base fees is primarily due to a 23.0% increase in average AUM.

Private Wealth Management investment advisory and services fees for the three months ended ~~March 31,~~September 30, 2021 increased by ~~$24.3~~$52.5 million, or ~~11.5%~~25.0%, from the three months ended ~~March 31,~~September 30, 2020, due to a ~~$21.0~~$38.9 million, or ~~10.2%~~18.7%, increase in base fees and a ~~$3.3~~$13.5 million increase in performance-based fees. The increase in base fees is primarily due to ~~an 11.1%~~a 20.3% increase in average AUM.

Private Wealth Management investment and advisory services fees for the nine months ended September 30, 2021 increased by $146.9 million, or 24.0%, from the nine months ended September 30, 2020, due to an

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increase in base fees of $111.2 million, or 18.4%, and a $35.7 million increase in performance-based fees. The increase in base fees is primarily due to a 17.3% increase in average AUM.

Bernstein Research Services

We earn revenues for providing investment research to, and executing brokerage transactions for, institutional clients. These clients compensate us principally by directing us to execute brokerage transactions on their behalf, for which we earn commissions, and to a lesser extent, but increasingly, by paying us directly for research through commission sharing agreements or cash payments.

Revenues from Bernstein Research Services for the three months ended ~~March 31,~~September 30, 2021 ~~decreased $10.2~~increased $14.8 million, or ~~7.9%~~15.0%, from the three months ended ~~March 31,~~September 30, 2020, due to ~~reduced~~higher customer trading activity and research payments across all regions. For the nine months ended September 30, 2021, Bernstein Research Services revenue decreased $3.3 million, or 1.0%, compared to the nine months ended September 30, 2020 due to lower trading activity driven by ~~fewer trading days and decreased~~lower global market volatility as compared to the COVID-related ~~significant~~ surge ~~in trading volume experienced during~~for the ~~three~~nine months ended ~~March 31,~~September 30, 2020.

This was partially offset by higher research payments.

Distribution Revenues

Two of our subsidiaries act as distributors and/or placement agents of company-sponsored mutual funds and receive distribution services fees from certain of those funds as partial reimbursement of the distribution expenses they incur. Period-over-period fluctuations of distribution revenues typically are in line with fluctuations of the corresponding average AUM of these mutual funds.

Distribution revenues for the three months ended ~~March 31,~~September 30, 2021 increased ~~$16.7~~$34.9 million, or ~~12.8%~~25.7%, from the three months ended ~~March 31,~~September 30, 2020, primarily due to the corresponding average AUM of these mutual funds increasing ~~12.4%.~~18.8%, as well as an increase in the overall portfolio fee rate. For the nine months ended September 30, 2021, distribution revenues increased $87.1 million, or 22.5%, compared to the nine months ended September 30, 2020, primarily due to the corresponding average AUM of these mutual funds increasing 18.1%, as well as an increase in the overall portfolio fee rate.

Dividend and Interest Income and Interest Expense

Dividend and interest income consists primarily of investment income and interest earned on customer margin balances and U.S. Treasury Bills as well as dividend and interest income in our consolidated company-sponsored investment funds. Interest expense principally reflects interest accrued on cash balances in customers’ brokerage accounts.

Dividend and interest income for the three months ended ~~March 31,~~September 30, 2021 decreased ~~$11.8~~$0.3 million, or ~~57.6%~~3.0%, from the three months ended ~~March 31,~~September 30, 2020, primarily due to lower interest on U.S Treasury Bills, partially offset by higher interest earned on customer margin balances. Interest expense for the three months ended September 30, 2021 decreased $0.5 million, or 34.6%, from the three months ended September 30, 2020, due to lower interest paid on cash balances in customers' brokerage accounts. For the nine months ended September 30, 2021, dividend and interest income decreased $16.1 million, or 38.1%, compared to the nine months ended September 30, 2020, primarily due to lower interest earned on ~~customer margin balances and~~ U.S. Treasury ~~Bills and~~bills, lower dividend and interest income in our consolidated company-sponsored investment ~~funds.~~funds and lower interest earned on customer margin balances. Interest expense for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 decreased ~~$8.2~~$11.4 million, or ~~87.7%~~80.0%, ~~from~~compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2020, due to lower interest paid on cash balances in customers' brokerage accounts.

Investment Gains (Losses)

Investment gains (losses) consist primarily of realized and unrealized investment gains or losses on: (i) employee long-term incentive compensation-related investments, (ii) U.S. Treasury Bills, (iii) market-making in exchange-traded options and equities, (iv) seed capital investments, (v) derivatives and (vi) investments in our consolidated company-sponsored investment funds. Investment gains (losses) also include equity in earnings of proprietary investments in limited partnership hedge funds that we sponsor and manage.

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Investment gains (losses) are as follows:


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020					2021		2020		2021		2020
		(in thousands)				(in thousands)
Long-term incentive compensation-related investments:	Long-term incentive compensation-related investments:							Long-term incentive compensation-related investments:
Realized gains	Realized gains	$	2,052	$	1,412			Realized gains	$	112	$	1,277	$	2,212	$	2,685
Unrealized (losses)		(40)		(8,511)
Unrealized gains (losses)								Unrealized gains (losses)	508		1,862		2,620		(1,387)

Investments held by consolidated company-sponsored investment funds:	Investments held by consolidated company-sponsored investment funds:							Investments held by consolidated company-sponsored investment funds:
Realized gains (losses)		1,342		(3,193)
Unrealized (losses)		(6,941)		(52,115)
Realized (losses) gains								Realized (losses) gains	(1,333)		694		327		(707)
Unrealized (losses) gains								Unrealized (losses) gains	(4,814)		3,684		(3,878)		(8,254)

Seed capital investments:	Seed capital investments:							Seed capital investments:
Realized gains (losses)	Realized gains (losses)							Realized gains (losses)
Seed capital and other	Seed capital and other	2,557		(2,653)				Seed capital and other	2,938		17,694		17,621		22,582
Derivatives	Derivatives	(7,847)		31,183				Derivatives	(1,760)		(12,568)		(20,230)		(13,458)
Unrealized gains (losses)	Unrealized gains (losses)							Unrealized gains (losses)
Seed capital and other	Seed capital and other	567		(11,926)				Seed capital and other	(1,630)		(8,165)		(7,460)		(17,505)
Derivatives	Derivatives	10,166		(1,600)				Derivatives	3,651		(1,518)		13,027		(1,964)

Brokerage-related investments:	Brokerage-related investments:							Brokerage-related investments:
Realized gains (losses)		122		(453)
Realized (losses)								Realized (losses)	(358)		(2,355)		(546)		(881)
Unrealized (losses) gains	Unrealized (losses) gains	(50)		3,550				Unrealized (losses) gains	(38)		501		(308)		(122)
		$	1,928	$	(44,306)				$	(2,724)	$	1,106	$	3,385	$	(19,011)

Other Revenues

Other revenues consist of fees earned for transfer agency services provided to company-sponsored mutual funds, fees earned for administration and recordkeeping services provided to company-sponsored mutual funds and the general accounts of EQH and its subsidiaries, and other miscellaneous revenues. Other revenues for the three months ended ~~March 31,~~September 30, 2021 increased ~~$2.2~~$0.4 million, or ~~8.6%~~1.5%, compared to the ~~corresponding period in~~three months ended September 30, 2020, primarily due to higher shareholder servicing fees, ~~and~~partially offset by lower brokerage income. Other revenues for the nine months ended September 30, 2021 increased $2.4 million, or 3.1%, compared to the nine months ended September 30, 2020, primarily due to higher shareholder servicing fees, partially offset by lower brokerage income.

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Expenses

The components of expenses are as follows:


		Three Months Ended March 31,									Three Months Ended September 30,								Nine Months Ended September 30,
		2021		2020		$ Change		% Change					2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
		(in thousands)								(in thousands)							(in thousands)
Employee compensation and benefits	Employee compensation and benefits	$	406,059	$	362,272	$	43,787	12.1	%			Employee compensation and benefits	$	433,928	$	357,821	$	76,107	21.3	%	$	1,275,694	$	1,069,731	$	205,963	19.3	%
Promotion and servicing:	Promotion and servicing:											Promotion and servicing:
Distribution-related payments	Distribution-related payments	162,254		140,145		22,109		15.8				Distribution-related payments	187,411		148,380		39,031		26.3		517,426		414,203		103,223		24.9
Amortization of deferred sales commissions	Amortization of deferred sales commissions	7,899		5,526		2,373		42.9				Amortization of deferred sales commissions	8,731		7,434		1,297		17.4		24,866		19,582		5,284		27.0
Trade execution, marketing, T&E and other	Trade execution, marketing, T&E and other	46,678		55,610		(8,932)		(16.1)				Trade execution, marketing, T&E and other	47,428		41,220		6,208		15.1		140,677		141,118		(441)		(0.3)
		216,831		201,281		15,550		7.7					243,570		197,034		46,536		23.6		682,969		574,903		108,066		18.8

General and administrative:												General and administrative:
General and administrative	General and administrative	120,223		122,267		(2,044)		(1.7)				General and administrative	132,064		119,318		12,746		10.7		383,611		363,009		20,602		5.7

Real estate charges												Real estate charges	—		—		—		—		—		5,526		(5,526)		(100.0)
													132,064		119,318		12,746		10.7		383,611		368,535		15,076		4.1
Contingent payment arrangements	Contingent payment arrangements	796		793		3		0.4				Contingent payment arrangements	838		813		25		3.1		2,472		2,413		59		2.4
Interest on borrowings	Interest on borrowings	1,294		2,834		(1,540)		(54.3)				Interest on borrowings	1,280		1,073		207		19.3		3,815		5,003		(1,188)		(23.7)
Amortization of intangible assets	Amortization of intangible assets	1,479		6,486		(5,007)		(77.2)				Amortization of intangible assets	1,502		6,833		(5,331)		(78.0)		4,502		20,042		(15,540)		(77.5)
Total	Total	$	746,682	$	695,933	$	50,749	7.3				Total	$	813,182	$	682,892	$	130,290	19.1		$	2,353,063	$	2,040,627	$	312,436	15.3

Employee Compensation and Benefits

Employee compensation and benefits consist of base compensation (including salaries and severance), annual short-term incentive compensation awards (cash bonuses), annual long-term incentive compensation awards, commissions, fringe benefits and other employment costs (including recruitment, training, temporary help and meals).

Compensation expense as a percentage of net revenues was ~~40.3%~~39.7% and ~~41.4%~~39.8% for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively. Compensation expense as a percentage of net revenues was 40.2% and 40.4% for the nine months ended September 30, 2021 and 2020, respectively. Compensation expense generally is determined on a discretionary basis and is primarily a function of our firm’s current-year financial performance. The amounts of incentive compensation we award are designed to motivate, reward and retain top talent while aligning our executives' interests with the interests of our Unitholders. Senior management, with the approval of the Compensation and Workplace Practices Committee of the Board of Directors of AllianceBernstein Corporation (“Compensation Committee”), periodically confirms that the appropriate metric to consider in determining the amount of incentive compensation is the ratio of adjusted employee compensation and benefits expense to adjusted net revenues. Adjusted net revenues used in the adjusted compensation ratio are the same as the adjusted net revenues presented as a non-GAAP measure (discussed earlier in this Item 2). Adjusted employee compensation and benefits expense is total employee compensation and benefits expense minus other employment costs such as recruitment, training, temporary help and meals (which ~~were 0.7% and 1.0%, respectively,~~was 0.9% of adjusted net revenues for the three months ended ~~March 31,~~September 30, 2021 and 0.8% for the nine months ended September 30, 2021), and excludes the impact of mark-to-market vesting expense, as well as dividends and interest expense, associated with employee long-term incentive compensation-related investments and the amortization expense associated with the awards issued by EQH to some of our firm's ~~CEO~~senior management relating to ~~his role~~their roles as ~~a member~~members of the EQH Management Committee. Senior management, with the approval of the Compensation Committee, has established as an objective that adjusted employee compensation and benefits expense generally should not exceed 50% of our adjusted net

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revenues, except in unexpected or unusual circumstances. Also, our adjusted compensation ratio reflects a balancing of the need to keep compensation levels competitive with industry peers in order to attract, motivate and retain highly-qualified talent with the need to maintain strong operating leverage in our business. The Compensation Committee works with management to help ensure both needs are sufficiently addressed. Our ratio of adjusted compensation expense as a percentage of adjusted net revenues was ~~48.5%~~48.0% for the three months ended ~~March 31,~~September 30, 2021 and 2020. Our ratio of adjusted compensation expense as a percentage of adjusted net revenues was 48.3% for the nine months September 30, 2021 and 2020.

For the three months ended ~~March 31,~~September 30, 2021, employee compensation and benefits expense increased ~~$43.8~~$76.1 million, or ~~12.1%~~21.3%, compared to the three months ended ~~March 31,~~September 30, 2020, primarily due to higher incentive compensation of ~~$39.1~~$50.7 million, higher base compensation of $11.8 million, higher commissions of $5.8 million, higher fringes of ~~$4.2~~$5.3 million and higher other employment costs of $2.5 million. For the nine months ended September 30, 2021, employee compensation and benefits expense increased $206.0 million, or 19.3%, compared to the nine months ended September 30, 2020, primarily due to higher incentive compensation of $149.1 million, higher base compensation of ~~$1.9~~$27.5 million, ~~partially offset by lower~~higher fringes of $15.0 million, higher commissions of $12.8 million and higher other employment costs of ~~$1.6~~$1.7 million.

Promotion and Servicing

Promotion and servicing expenses include distribution-related payments to financial intermediaries for distribution of AB mutual funds and amortization of deferred sales commissions paid to financial intermediaries for the sale of back-end load

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shares of AB mutual funds. Also included in this expense category are costs related to travel and entertainment, advertising and promotional materials.

Promotion and servicing expenses increased ~~$15.6~~$46.5 million, or ~~7.7%~~23.6%, during the three months ended ~~March 31,~~September 30, 2021 compared to the three months ended ~~March 31,~~September 30, 2020. The increase primarily was due to higher distribution-related payments of ~~$22.1~~$39.1 million, higher transfer fees of $3.4 million, higher marketing and communication expenses of $1.9 million, higher travel and entertainment expenses of $1.7 million and higher amortization of deferred sales commissions of ~~$2.4~~$1.3 million, ~~partially~~ offset by lower ~~travel and entertainment~~trade execution expenses of ~~$6.8 million and lower marketing and communication expenses of $3.0~~$0.7 million. ~~The decrease~~During the three months ended September 30, 2020, we experienced cost savings in travel and entertainment and marketing expense is primarily ~~a result of cost savings associated with the COVID-19 pandemic;~~driven by COVID-19. These expense items have since increased as business activity has started to normalize, and we expect business activity, and these ~~costs~~expenses, to continue to ~~increase in~~normalize through the remainder of 2021 and ~~further normalize in 2022, as~~future periods, assuming the pandemic ~~recedes.~~continues to recede. Promotion and servicing expenses increased $108.1 million, or 18.8%, during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. The increase primarily was due to higher distribution-related payments of $103.2 million, higher transfer fees of $7.2 million, higher amortization of deferred sales commissions of $5.3 million and higher marketing and communications expenses of $1.0 million, offset by lower trade execution expenses of $4.7 million and lower travel and entertainment expenses of $3.9 million.

General and Administrative

General and administrative expenses include portfolio services expenses, technology expenses, professional fees and office-related expenses (occupancy, communications and similar expenses). General and administrative expenses as a percentage of net revenues were ~~11.9%~~12.1% and ~~14.0%~~13.3% for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively. General and administrative expenses ~~decreased $2.0~~increased $12.7 million, or ~~1.7%~~10.7%, during the three months ended ~~March 31,~~September 30, 2021 compared to the corresponding period in 2020, primarily due to ~~lower~~higher technology fees of $5.4 million, higher office-related expenses of $5.3 million and higher portfolio servicing fees of ~~$2.1~~$3.8 million, partially offset by lower professional fees of $1.0 million. General and administrative expenses as a percentage of net revenues were 12.1% and 13.9% (13.7% excluding real estate charges) for the nine months ended September 30, 2021 and 2020, respectively. General and administrative expenses increased $15.1 million, or 4.1%, during the first nine months of 2021 compared to the nine months ended September 30, 2020, primarily due to higher technology fees of $6.6 million, higher portfolio servicing fees of $5.7 million and higher errors of $3.5 million, partially offset by a relocation incentive credit of $1.0 million.

Contingent Payment Arrangements

Contingent payment arrangements reflect changes in estimates of contingent payment liabilities associated with acquisitions in previous periods, as well as accretion expense of these liabilities. There were no changes in our estimates during the first ~~three~~nine months of 2021 or 2020.

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Income Taxes

AB, a private limited partnership, is not subject to federal or state corporate income taxes. However, AB is subject to a 4.0% New York City unincorporated business tax (“UBT”). Our domestic corporate subsidiaries are subject to federal, state and local income taxes and generally are included in the filing of a consolidated federal income tax return. Separate state and local income tax returns also are filed. Foreign corporate subsidiaries generally are subject to taxes in the jurisdictions where they are located.

Income tax expense for the three months ended ~~March 31,~~September 30, 2021 increased ~~$7.3~~$6.9 million, or ~~76.7%~~76.4%, compared to the three months ended ~~March 31,~~September 30, 2020. Income tax expense for the nine months ended September 30, 2021 increased $15.3 million, or 51.1%, compared to the nine months ended September 30, 2020. The increase ~~was primarily~~in income tax expense is due to higher foreign income in both the three and nine month periods ended September 30, 2021, which carries a higher ~~effective~~ tax rate ~~for the three months ended March 31, 2021 of 6.4% compared to 5.3% for the corresponding period in 2020, driven by an increase in one-time discrete items.~~than domestic income. There were no material changes to uncertain tax positions (FIN 48 reserves) or valuation allowances against deferred tax assets for the three and nine months ended ~~March 31,~~September 30, 2021.

Net Income (Loss) of Consolidated Entities Attributable to Non-Controlling Interests

Net income (loss) of consolidated entities attributable to non-controlling interests primarily consists of limited partner interests owned by other investors in our consolidated company-sponsored investment funds. For the three months ended ~~March 31,~~September 30, 2021, we had ~~$0.3~~$1.1 million ofin net losses of consolidated entities attributable to non-controlling interests compared to net ~~losses~~gains of ~~$25.6~~$0.1 million for the three months ended ~~March 31,~~September 30, 2020. For the nine months ended September 30, 2021, we had $2.2 million of net gains of consolidated entities attributable to non-controlling interests compared to net losses of $4.6 million for the nine months ended September 30, 2020. Fluctuations period-to-period result primarily from the number of consolidated company-sponsored investment funds and their respective market performance.

CAPITAL RESOURCES AND LIQUIDITY

Cash flows from operating activities primarily include the receipt of investment advisory and services fees and other revenues offset by the payment of operating expenses incurred in the normal course of business. Our cash flows from operating activities have historically been positive and sufficient in supporting our operations. We do not anticipate this to change in the foreseeable future. Cash flows from investing activities generally consist of small capital expenditures and, when applicable, business acquisitions. Cash flows from financing activities primarily consist of issuance and repayment of debt and the repurchase of AB Holding units to fund our long-term deferred compensation plans. We are required to distribute all of our Available Cash Flow to our Unitholders and the General Partner.

During the first ~~three~~nine months of 2021, net cash provided by operating activities was ~~$328.0 million,~~$1.4 billion, compared to ~~$285.9 million~~$1.6 billion during the corresponding 2020 period. The change reflects net activity of our consolidated funds of $325.6 million and an increase in other assets of $222.9 million, partially offset by higher earnings of $204.6 million, an increase in accrued compensation and benefits of $101.0 million, an increase in accounts payable and accrued expenses of $41.1 million and lower net purchases of broker-dealer investments of ~~$71.1 million, a~~

~~Index~~

decrease in other assets of $49.1 million and an increase in broker-dealer related payables (net of receivables and segregated U.S. Treasury bills activity) of $47.1 million, partially offset by net activity of our consolidated funds of $148.3$32.1 million.

During the first ~~three~~nine months of 2021, net cash used in investing activities was ~~$19.4~~$55.9 million, compared to ~~$14.8~~$25.9 million during the corresponding 2020 period. The change is primarily due to higher purchases of furniture, equipment and leasehold improvements of ~~$12.3~~$39.7 million, ~~partially~~ offset by lower cash paid for acquisitions of ~~$7.7~~$9.8 million.

During the first ~~three~~nine months of 2021, net cash used in financing activities ~~was $381.9~~decreased $41.7 million ~~compared to net cash provided of $113.3 million during~~from the corresponding 2020 period. The change reflects ~~higher~~the net ~~repayments~~purchases of ~~debt~~non-controlling interests of ~~$424.8 million, a decrease~~consolidated company-sponsored investment funds during first nine months of 2021 as compared to net redemptions in ~~overdrafts payable~~the corresponding 2020 period (impact of ~~$86.6 million and~~$277.3 million), partially offset by higher distributions to the General Partner and Unitholders of ~~$35.9~~$166.9 million as a result of higher earnings (distributions on earnings are paid one quarter in arrears)~~, partially offset by lower redemptions~~ and an increase in the net purchases of ~~non-controlling interests~~AB Holding Units to fund long-term incentive compensation plans of ~~consolidated company-sponsored investment funds of $61.6~~$68.0 million.

As of ~~March 31,~~September 30, 2021, AB had ~~$1.0~~$1.2 billion of cash and cash equivalents (excluding cash and cash equivalents of consolidated company-sponsored investment funds), all of which is available for liquidity but consist primarily of cash on deposit for our broker-dealers related to various customer clearing activities, and cash held by foreign subsidiaries of ~~$608.2~~$698.9 million.

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Debt and Credit Facilities

See Note 16 and Note 18 to AB’s condensed consolidated financial statements contained in Item 1, for disclosures relating to our debt and credit facilities.

Our financial condition and access to public and private debt markets should provide adequate liquidity for our general business needs. Management believes that cash flow from operations and the issuance of debt and AB Units or AB Holding Units will provide us with the resources we need to meet our financial obligations. See “Cautions Regarding Forward-Looking Statements.”

COMMITMENTS AND CONTINGENCIES

AB’s capital commitments, which consist primarily of operating leases for office space, generally are funded from future operating cash flows.

During 2010, as general partner of AllianceBernstein U.S. Real Estate L.P. (“Real Estate Fund”), we committed to invest $25.0 million in the Real Estate Fund. As of ~~March 31,~~September 30, 2021, we had funded $22.4 million of this commitment. During 2014, as general partner of AllianceBernstein U.S. Real Estate II L.P. (“Real Estate Fund II”), we committed to invest $27.3 million, as amended in 2020, in Real Estate Fund II. As of ~~March 31,~~September 30, 2021, we had funded ~~$20.8~~$21.0 million of this commitment.

See Note 12 for discussion of contingencies.

CRITICAL ACCOUNTING ESTIMATES

The preparation of the condensed consolidated financial statements and notes to condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.

There have been no updates to our critical accounting estimates from those disclosed in “Management’s Discussion and Analysis of Financial Condition” in our Form 10-K for the year ended December 31, 2020.

ACCOUNTING PRONOUNCEMENTS

See Note 2 to AB’s condensed consolidated financial statements contained in Item 1.

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CAUTIONS REGARDING FORWARD-LOOKING STATEMENTS

Certain statements provided by management in this report and in the portion of AB’s Form 10-Q attached hereto as Exhibit 99.1 are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: the performance of financial markets, the investment performance of sponsored investment products and separately-managed accounts, general economic conditions, industry trends, future acquisitions, integration of acquired companies, competitive conditions and government regulations, including changes in tax regulations and rates and the manner in which the earnings of publicly-traded partnerships are taxed. We caution readers to carefully consider such factors. Further, these forward-looking statements speak only as of the date on which such statements are made; we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actual results to differ, see “Risk Factors” in Part I, Item 1A of our Form 10-K for the year ended December 31, 2020 and Part II, Item 1A in this Form 10-Q. Any or all of the forward-looking statements that we make in our Form 10-K, this Form 10-Q, other documents we file with or furnish to the SEC, and any other public statements we issue, may turn out to be wrong. It is important to remember that other factors besides those listed in “Risk Factors” and those listed below could also adversely impact our revenues, financial condition, results of operations and business prospects.

The forward-looking statements referred to in the preceding paragraph, most of which directly affect AB but also affect AB Holding because AB Holding’s principal source of income and cash flow is attributable to its investment in AB, include statements regarding:

•Our belief that the cash flow AB Holding realizes from its investment in AB will provide AB Holding with the resources it needs to meet its financial obligations: AB Holding’s cash flow is dependent on the quarterly cash distributions it receives from AB. Accordingly, AB Holding’s ability to meet its financial obligations is dependent on AB’s cash flow from its operations, which is subject to the performance of the capital markets and other factors beyond our control.

•Our financial condition and ability to access the public and private capital markets providing adequate liquidity for our general business needs: Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to access public and private capital markets on reasonable terms may be limited by adverse market conditions, our firm’s credit ratings, our profitability and changes in government regulations, including tax rates and interest rates.

•The outcome of litigation: Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do not expect any pending legal proceedings to have a material adverse effect on our results of operations, financial condition or liquidity, any settlement or judgment with respect to a legal proceeding could be significant and could have such an effect.

•The possibility that we will engage in open market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program: The number of AB Holding Units AB may decide to buy in future periods, if any, to help fund incentive compensation awards depends on various factors, some of which are beyond our control, including the fluctuation in the price of an AB Holding Unit (NYSE: AB) and the availability of cash to make these purchases.

•Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues: Aggregate employee compensation reflects employee performance and competitive compensation levels. Fluctuations in our revenues and/or changes in competitive compensation levels could result in adjusted employee compensation expense exceeding 50% of our adjusted net revenues.

•Our Relocation Strategy: While the expenses, expense savings and EPU impact we expect will result from our Relocation Strategy are presented with numerical specificity, and we believe these figures to be reasonable as of the date of this report, the uncertainties surrounding the assumptions on which our estimates are based create a significant risk that our current estimates may not be realized. These assumptions include:

•the amount and timing of employee relocation costs, severance and overlapping compensation and occupancy costs we experience; and

•the timing for execution of each phase of our relocation implementation plan.

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•The Adverse Impact of COVID-19: The severity of any possible adverse impact on our AUM and revenues of any new economic downturn caused by a possible resurgence of the COVID-19 pandemic ~~will~~would depend on the depth and length of ~~the~~any such downturn and its impact on the companies in which we invest. Our conclusions about the possible ~~continuing~~ adverse impact on us isare based on our assumptions that the recovery ~~will~~from any such possible new economic downturn would be gradual and that there ~~will~~could again be significant, lasting high unemployment and economic damage. We believe that these assumptions are reasonable, but they may not be correct and economic conditions likely will differ from our assumptions.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in AB’s market risk from the information provided under “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of AB's Form 10-K for the year ended December 31, 2020.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Each of AB Holding and AB maintains a system of disclosure controls and procedures that is designed to ensure that information required to be disclosed in our reports under the Exchange Act is (i) recorded, processed, summarized and reported in a timely manner, and (ii) accumulated and communicated to management, including the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), to permit timely decisions regarding our disclosure.

As of the end of the period covered by this report, management carried out an evaluation, under the supervision and with the participation of the CEO and the CFO, of the effectiveness of the design and operation of the disclosure controls and procedures. Based on this evaluation, the CEO and the CFO concluded that the disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the ~~first~~third quarter of 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II

OTHER INFORMATION

Item 1. Legal Proceedings

See Note 12 to the condensed consolidated financial statements contained in Part I, Item 1.

Item 1A. Risk Factors

~~There have been no material~~On September 10, 2021, Senate Finance Committee Chair Ron Wyden released draft legislation that would make significant changes to the ~~risk factors from those appearing~~current partnership tax rules. While it is highly uncertain whether the draft legislation will become law, if the draft legislation were to be enacted in its current form AB Holding would lose its status as a “grandfathered” PTP and become subject to federal and state corporate income tax and pay significantly more federal and state corporate income tax. See Part 1, Item 1A "Risk Factors" in our Annual Report on Form 10-K ("AB 10-K") for the fiscal year ended December 31, ~~2020.~~2020 for further details surrounding changes in the tax law governing partnerships.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

AB Units bought by us or one of our affiliates during the ~~first~~third quarter of 2021 are as follows:

ISSUER PURCHASES OF EQUITY SECURITIES

Period Total Number
of AB Units
Purchased
Average Price
Paid Per
AB Unit, net of
Commissions
Total Number of
AB Units Purchased as
Part of Publicly
Announced Plans
or Programs Maximum Number
(or Approximate
Dollar Value) of
AB Units that May Yet
Be Purchased Under
the Plans or
Programs
1/1/21 - 1/31/21 — $ — — —
2/1/21 - 2/28/21 — — — —
3/1/21 - 3/31/21(1)
1,400 37.00 — —
Total 1,400 $ 37.00 — —


Period	Total Number of AB Units Purchased	Average Price Paid Per AB Unit, net of Commissions		Total Number of AB Units Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of AB Units that May Yet Be Purchased Under the Plans or Programs
7/1/21 - 7/31/21	—	$	—	—	—
8/1/21 - 8/31/21	—	—		—	—
9/1/21 - 9/30/21(1)	4,000	51.58		—	—
Total	4,000	$	51.58	—	—

(1)During ~~March~~September 2021, AB purchased ~~1,400~~4,000 AB Units in private transactions.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

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Item 6. Exhibits


31.1			Certification of Mr. Bernstein furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification of Mr. Dibadj furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Certification of Mr. Bernstein furnished for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2			Certification of Mr. Dibadj furnished for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH			XBRL Taxonomy Extension Schema.

101.CAL			XBRL Taxonomy Extension Calculation Linkbase.

101.LAB			XBRL Taxonomy Extension Label Linkbase.

101.PRE			XBRL Taxonomy Extension Presentation Linkbase.

101.DEF			XBRL Taxonomy Extension Definition Linkbase.

104			The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~September 30, 2021, formatted in Inline XBRL (included in Exhibit 101).

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:

~~April 29,~~October 28, 2021

ALLIANCEBERNSTEIN L.P.

By:

/s/ Ali Dibadj

Ali Dibadj

Chief Financial Officer ~~and~~& Head of Strategy

By:

/s/ William R. Siemers

William R. Siemers

Chief Accounting Officer

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