Alternative Investments Agreement
This document supplements your Customer Account Agreement between you and DriveWealth and must be completed in order to hold, purchase, redeem, or sell Alternative Investments in your DriveWealth account. The acquisition and/or holding of an Alternative Investment in your DriveWealth account imposes additional burdens upon DriveWealth. Nevertheless, DriveWealth will allow you to acquire and hold Alternative Investments in your DriveWealth account provided that you represent, acknowledge, and agree to assume certain responsibilities. “Alternative Investments” include certain publicly or non-publicly traded alternative investment assets and do not include securities or equity securities of a Direct Participation Program (DPP) or Real Estate Investment Trust (REIT), on deposit in a registered securities depository and settled in the regular way, listed on a national securities exchange or the NASDAQ, or any equity securities of a DPP registered as a Commodity Pool with the Commodities Futures Trading Commission.
Alternative Investments will be held in your DriveWealth account solely in accordance with the terms and conditions of this Alternative Investments Agreement and your DriveWealth Customer Account Agreement. THIS AGREEMENT REGARDING ALTERNATIVE INVESTMENTS IS A LEGAL DOCUMENT THAT WILL IMPOSE CERTAIN DUTIES AND RESPONSIBILITIES ON YOU WHICH MAY AFFECT YOUR LEGAL RIGHTS. BEFORE SIGNING THIS AGREEEMENT YOU ARE URGED TO CONSULT WITH YOUR LEGAL ADVISOR.
You acknowledge that you have received, reviewed, and understand the terms of this Alternative Investments Agreement and agree to be bound by such terms. As used in this agreement the words “we,” “us,” “our,” and “DriveWealth” refer to DriveWealth, LLC. The words “you,” “your,” “yours,” and “client” refer to the account owner.
WHEREAS, the individual (the “Client”) named at the end of this Agreement has, or desires to establish, an account at DriveWealth; and
WHEREAS, the Client has or desires to acquire and/or hold Alternative Investments in their DriveWealth account; and
WHEREAS, DriveWealth will allow the Alternative Investments to be held in the account, only to the extent specified in and subject to the terms and conditions set forth below:
1. INDEPENDENT INVESTMENT DECISION
a. You acknowledge that you and/or your broker will have the sole responsibility for the investment decisions, review, and management of the Alternative Investments in your DriveWealth account. You take full responsibility for determining the appropriateness and suitability of the Alternative Investments. DriveWealth is acting only in its capacity as custodian of your account. You understand, agree to, and acknowledge that DriveWealth, its officers, employees, agents, and affiliates has not provided, and shall not provide, any investment advice, tax advice, or legal advice concerning any Alternative Investments, or concerning the suitability, profit potential, tax treatment, or risks of any Alternative Investments for you or your account. You have made or will make an independent investigation and assessment of any such Alternative Investment, including its suitability, appropriateness as related to your investment strategy, profit potential, tax treatment, and risk. DriveWealth has not solicited and shall not solicit transactions in the Alternative Investments, and has not made and shall not make, any recommendations regarding the Alternative Investments or their appropriateness with respect to your investment strategy.
b. You take full responsibility for reviewing the terms of all offering and disclosure documents, materials, and agreements affecting or pertaining to the Alternative Investments and for monitoring the Alternative Investments for any conversion or exercise options or other corporate actions. You are responsible for reviewing and monitoring your account statements to confirm the accuracy of any information relating to your Alternative Investments. You understand that you shall be responsible for determining whether you satisfy the suitability or other requirements for a particular Alternative Investment, such as status as an “accredited investor” under the Securities Act of 1933, as amended. You further understand and agree to abide by the terms and conditions mandated by any Alternative Investment.
2. DRIVEWEALTH’S RESPONSIBILITIES
a. DriveWealth’s responsibility is solely to custody the Alternative Investments and does not include any obligation to notify the Client (or any other party) of the receipt or failure to receive any amount, to forward to the Client any notices with respect to the Alternative Investment, to monitor or report to the Client as to the performance or nonperformance of any person with respect to the Alternative Investment (or the performance or nonperformance by any person of any obligation or term contained in, or imposed by, the Alternative Investment) or to take enforcement or other action with respect thereto, regardless of whether DriveWealth has any actual or constructive knowledge which might make such action or inaction advisable.
b. DriveWealth shall have no responsibilities with respect to the Alternative Investments other than outlined in this agreement. DriveWealth will, as required by applicable laws and rules: (i) hold the Alternative Investments in nominee’s name or, if applicable, your name; (ii) purchase, redeem, or sell on your behalf, the Alternative Investments, in accordance with you and/or your broker’s instructions, subject to the satisfaction of DriveWealth’s custody requirements; (iii) reflect the Alternative Investments on confirmations and account statements in such form as DriveWealth may deem appropriate; (iv) credit your DriveWealth account with any earnings or principal payments received with respect to the Alternative Investments; (v) forward issuer communications received by DriveWealth regarding the Alternative Investments; and (v) perform custodial duties with respect to your account.
c. DriveWealth will only take such actions on your account and transactions in Alternative Investments as directed by you and/or your broker. DriveWealth shall have no responsibility for monitoring the Alternative Investments. If the Alternative Investment, or the terms of the acquisition or disposition thereof, requires or makes advisable the taking (or refraining from taking) of any action, then the Client and not DriveWealth shall have the sole obligation to take (or refrain from taking), or instruct DriveWealth to take such action. Such actions may include, but are not limited to, maintaining sufficient assets in the account to meet any capital calls or to pay any expenses for, or relating to, the administration and maintenance of the Alternative Investment and filing such documents as may be necessary or advisable to preserve, protect, or defend the title to the Alternative Investments.
3. VALUATION AND REPORTING OF ALTERNATIVE INVESTMENTS
a. General Terms: You acknowledge and agree that: (i) Alternative Investments that are not publicly traded generally lack a liquid market and that the value of such Alternative Investments may be difficult or impossible to ascertain; and (ii) any estimated value reflected on your Account statement is for informational purposes only, may not be current, and may be significantly different than the actual market value or the liquidation value of such Alternative Investments.
b. Source of Valuation and Reporting on Confirmations and Account Statements: Alternative Investments shall be valued and displayed on confirmations and account statements as follows.
i. If Alternative Investments are publicly traded, DriveWealth will display the market price on your confirmations and account statements pursuant to its normal practices;
ii. If Alternative Investments are purchased through Rally Rd.TM prices will be listed at the last matched transaction price in a specific Alternative Investment. Your statements will show (unrealized) profit/losses relative to your individual cost-basis.
a. The Client agrees to indemnify and hold harmless DriveWealth, its officers, registered representatives, employees, and affiliates, from and against any and all liabilities, penalties, losses, damages, claims, costs, expenses, and disbursements (including legal fees and expenses) which may be imposed upon, incurred by, or asserted against DriveWealth, including, but not limited to, the following: (i) relating to or arising out of a failure by the client to timely and properly file any tax returns, or a failure to timely pay any tax required as a result of, or attributable to, the investment in an Alternative Investment; (ii) as a result of the use for any purpose by DriveWealth of the valuation of the Alternative Investment in accordance with this agreement; (iii) arising out of, or in connection with, the acquisition, holding, or disposition of the Alternative Investment; or (iv) DriveWealth’s agreement to act as custodian of the Alternative Investment pursuant to this Agreement.
b. Fees and Expenses: Promptly upon demand, the Client shall pay or reimburse DriveWealth for all out-of-pocket fees and expenses (including legal fees and expenses) incurred by, or imposed upon, DriveWealth as a result of holding the Alternative Investment.
c. Notices: All notices to the Client shall be deemed given if mailed by first class mail, postage prepaid, addressed to the Client at the address appearing in the records of DriveWealth, and any notice or other communication to DriveWealth shall be deemed given when received by DriveWealth at 97 Main Street, 2nd Floor, Chatham, NJ 07928.
5. ACKNOWLEDGEMENT OF RISK
a. You acknowledge that investing in publicly or non-publicly traded securities, including the Alternative Investments in your account, can be risky and that profits are not guaranteed – you could lose all, or substantially, all of your investment. You acknowledge that you are responsible for determining the nature, potential value, and suitability of Alternative Investments pursuant to this agreement. DriveWealth has not provided you with advice or guidance of any kind on the suitability or value of the Alternative Investments. You acknowledge that certain Alternative Investments may not be covered by FDIC, SIPC, or by any additional insurance coverage in excess of SIPC otherwise made available by DriveWealth. You further acknowledge and understand that DriveWealth has not conducted, and will not conduct, any due diligence review or evaluation of any kind on the Alternative Investments that you own or may own in your DriveWealth account.
a. You assume financial responsibility with respect to all transactions in your Account and your investment decisions. You acknowledge that DriveWealth does not provide tax, accounting or legal advice and that you and your advisers are responsible for these matters. You should consult with your tax adviser regarding tax consequences of your investment decisions.
7. ADDITIONAL PROVISIONS FOR IRA ACCOUNTS
a. You and/or your broker assume full responsibility for ensuring that all securities and/or property held in an IRA account is/are held in accordance with the terms and conditions of the governing IRA custodial agreement or applicable retirement plan document(s). If the Account is an IRA or non-prototype retirement plan account you acknowledge that you assume full responsibility for reviewing the terms of the Alternative Investment to ensure that maintaining the Alternative Investment in an IRA or retirement plan does not and will not constitute a prohibited transaction as defined under the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Code (“IRC”) and related regulations, interpretations and guidance and is otherwise in compliance with all applicable laws, rules and regulations. With respect to your IRA or non-prototype retirement plan account, you represent (and with each instruction to hold or purchase Alternative Investments will be deemed to have repeated such representation) that holding the Alternative Investment in an IRA or retirement plan is in compliance with all applicable laws, rules and regulations, including the IRC and ERISA. In addition, you represent that you assume full responsibility for satisfying applicable IRS minimum distribution requirements, notwithstanding the unique liquidity and valuation challenges applicable to Alternative Investment. You represent that you have consulted with such advisor(s) (other than DriveWealth) as you deem necessary and appropriate to determine whether your account’s investment in any particular Alternative Investment results in a non-exempt prohibited transaction under ERISA or the Code. You hereby hold DriveWealth harmless should it be determined that you entered into a prohibited transaction. You understand that if it is determined that the Alternative Investment constitutes a prohibited transaction, your account may be subject to loss of tax-deferred status and subject to a full account distribution or to the imposition of excise taxes by the Internal Revenue Service (IRS) or Department of labor (DOL).
b. An IRA custodian is not required to hold all investments made by an IRA client, and many institutions which act as custodians of IRAs will not allow a client to hold a non-publicly traded investment in the client’s IRA. As a result, a client who acquires a non-publicly traded Alternative Investment in his or her IRA may thereafter be unable to transfer that investment to an IRA maintained by another custodian. As a result, a client may be required to continue to utilize DriveWealth as a custodian of his or her IRA with respect to the non-publicly traded Alternative Investment. Furthermore, in the event that DriveWealth should resign as custodian of a client’s IRA or DriveWealth should revoke its consent to hold the Alternative Investment (as DriveWealth is allowed) in the IRA, the client may be forced to sell his or her non-publicly traded investment if the client cannot find another custodian who will agree to allow the client to hold the non-publicly traded investment in the client’s IRA.
c. This Alternative Investments Agreement is supplemental to the custodial agreement for my IRA.
8. NO CHANGE TO YOUR CLIENT AGREEMENT
a. You understand and acknowledge that this Alternative Investments Agreement, including the above understandings, representations, agreements, and acknowledgements, does not supersede, modify, or in any way affect the understandings, representations, agreements, and acknowledgements made in your DriveWealth Customer Account Agreement, or DriveWealth IRA Agreement. You hereby affirm each of the understandings, representations, agreements, and acknowledgements in your Client Agreement including, but not limited to, DriveWealth’s authorization to rely on the directions or instructions of any account owner if there is more than one account owner, your broker if trading is conducted on a discretionary basis, or any person(s) with a power of attorney covering transactional activity in your account. You understand that DriveWealth reserves the right to refuse to accept any Alternative Investment and shall have no liability with respect to any such refusal. You acknowledge receiving a copy of this Alternative Investments Agreement and agree that this agreement will be subject to the Arbitration Provisions outlined in your DriveWealth Customer Account Agreement.
This agreement pertains to all Alternative Investments transactions held in the Client’s DriveWealth account.