Cash Management Program Disclosure Statement - Bank Sweep Deposit Program

 

Last Updated: October 2, 2024

1. Introduction

 DriveWealth offers Cash Management Programs to automatically invest, or “sweep,” the “Free Credit Balance” [1] in your eligible DriveWealth brokerage account(s) (“Accounts”), into a liquid investment which may earn a return while you decide how those funds should be invested longer term. This document explains the features of DriveWealth’s Bank Sweep Deposit Program and provides important disclosures about each feature.

Please make sure to read this document carefully and keep a copy for your records.

You understand that by establishing an Account at DriveWealth, you will be enrolled in the Bank Sweep Deposit Program, unless and until you decide to unenroll by contacting your Introducing Firm.

The “Bank Sweep Deposit Program” automatically sweeps your eligible Free Credit Balances into an interest bearing deposit account at our applicable Program Bank.

Returns and Yields

DriveWealth’s Bank Sweep Deposit Program is not intended to be a long-term investment. You should also consider higher-return options for your funds that are not immediately needed for investments purposes, as yields on the Bank Sweep Deposit Program may be lower than those of similar investments or deposit accounts offered outside of DriveWealth.

Changes to the Cash Management Program

You understand and agree that DriveWealth may: (i) make changes to the terms and conditions of any of our Cash Management Program; (ii) change, add, or discontinue any Cash Management Program; (iii) change your investment from one Cash Management Program to another program to another program for any reason, including if your current Cash Management Program is discontinued; and (iv) make any other changes to the Cash Management Program as allowed by applicable laws and regulations. DriveWealth will notify you in writing (whether through posting online, through your Introducing Firm’s application, email, in paper form, or otherwise) of material changes to the terms of our Cash Management Programs including changes to the available program prior to the effective date of the proposed change.

In the event that you are notified that your Cash Management Program will be changed to another available program, you agree to respond to us in the manner and within the time period set forth in the notice. If you do not respond in the manner and within the specified time period, you agree that we may treat your non-response as your acceptance of the new program. Your authorization will remain in effect until you give us notice to the contrary.

If you close your Account for any reason, your participation in a Cash Management Program will also be automatically terminated, and your Free Credit Balances swept into such applicable Cash Management Program will be returned to you.

Bank Sweep Deposit Program

a. Program Description. The Bank Sweep Deposit Program automatically sweeps your eligible Free Credit Balances into an interest- bearing deposit account (“Deposit Account”) held at the participating bank (“Program Bank”). DriveWealth’s Bank Sweep Deposit Program utilizes the following Program Bank: Customers Bank. You will not have a direct account relationship with the Program Bank unless you have a separate account with such bank outside of the Bank Sweep Deposit Program. In each case your funds will be held in an omnibus account in the name of “DriveWealth, LLC as Agent and Custodian for the Exclusive Benefit of its Customers.” You maintain a beneficial ownership interest in the omnibus Account equal to the aggregate amount of your Free Credit Balances. DriveWealth maintains the record of your ownership in the funds; your position is not directly maintained on the records of the Program Bank. There is no minimum eligible Free Credit Balance necessary to initially participate in the Bank Sweep Deposit Program and no ongoing minimum balance requirement. There is also no minimum period that your eligible funds must remain on deposit with the Program Bank and no limitation as to the number of, or aggregate value of, withdrawals that DriveWealth may affect under the Bank Sweep Deposit Program.

b. FDIC Insured Accounts. The Bank Sweep Deposit Program provides you with the security of Federal Deposit Insurance Corporation (“FDIC”) insurance protection. FDIC Insurance is backed by the full faith and credit of the United States government. FDIC insurance protects your eligible funds on deposit with the Program Bank under the Bank Sweep Deposit Program, up to the maximum allowable limits, in the event that the bank fails. Currently, the maximum deposit insurance is two hundred fifty thousand dollars ($250,000 USD) per legal category of account ownership at the Program Bank, when aggregated with all other deposits you may hold at the Program Bank in the same legal category of account ownership. Funds that you hold on deposit with the Program Bank outside of the Bank Sweep Deposit Program will not be taken into account in determining whether to sweep you eligible Free Credit Balances to the Program Bank. Conditions must be satisfied for pass-through coverage to apply. Non-deposit products are not insured by the FDIC. You are solely responsible for monitoring the aggregate amount that you have on deposit with the Program Bank in connection with FDIC insurance limits. Depending on your individual facts and circumstances, additional sums may be available for FDIC coverage. See, FDIC Summary at the end of this document for additional information. DriveWealth, LLC is not a bank and is not itself an FDIC-insured institution, and FDIC deposit insurance coverage only protects against the failure of an FDIC-insured depository institution.

c. Securities Investor Protection Corporation (“SIPC”). SIPC is a nonprofit member corporation funded primarily by member securities brokerage firms registered with the Securities and Exchange Commission. SIPC covers against custodial loss and not investment related losses such as a decrease in the market value of an investment. DriveWealth is a member of SIPC. Eligible Free Credit Balances in the Bank Sweep Deposit Program are not covered by SIPC.

d. Your Responsibility. Neither DriveWealth nor the Program Bank have any responsibility for monitoring your FDIC Insurance limits or for making recommendations as to the investment options available for your Free Credit Balances. You should contact your Introducing Broker or Investment Advisor if you have investment related questions.

e. Deposits. By participating in the Bank Sweep Deposit Program you authorize DriveWealth to automatically sweep your eligible Free Credit Balances to the Program Bank at the end of each Business Day [2].

f. Withdrawals and Access to Funds. By participating in the Bank Sweep Deposit Program you authorize DriveWealth to automatically withdraw your funds on deposit at the Program Bank, as needed, in order to satisfy a debt in your Account, to reconcile a buy trade in your Account or, if applicable, to provide the necessary collateral to your margin account at any time. You understand that you cannot withdraw your funds directly with the Program Bank; all withdrawals are processed through your Account and as part of the Bank Sweep Deposit Program. In the event of a failure of the Program Bank, there may be a time period where you may not be able to access your funds on deposit.

g. Account Statements. All Bank Sweep Deposit Program transactions will appear on your periodic Account statements in lieu of separate confirmations. You will not receive a separate statement from the Program Bank.

h. Program Bank Information. DriveWealth’s Bank Sweep Deposit Program utilizes the following Program Bank: Customers Bank. The Program Bank is a federal savings bank and an FDIC-insured depository institution. You can obtain publicly available information about the Program Bank on the FDIC’s website, fdic.gov, or by contacting the FDIC’s Division of Information and Research by writing to Federal Deposit Insurance Corporation, Division of Information and Research, 550 17th Street, NW, Washington, DC 20429-9990; or by calling the FDIC’s Division of Information and Research at 877-275-3342. DriveWealth does not guarantee the financial condition of the Program Bank, or the accuracy of any publicly available information concerning the Program Bank. The Free Credit Balances included in the Bank Sweep Deposit Program constitute a direct obligation of the Program Bank and is not directly or indirectly an obligation of DriveWealth or any of its affiliates. Although your funds are a direct obligation of the Program Bank, DriveWealth maintains evidence of your ownership within its records, as custodian of your Account. You will not receive separate evidence of ownership from the Program Bank.

i. Interest Rates. Interest will be accrued daily on the balance of Free Credit Balances on deposit with the Program Bank. The interest will be credited and paid by the Program Bank at the end of each month, on the date your Account closes, or when you withdraw Eligible Free Credits from the Bank Sweep Deposit Program. Interest will begin to accrue on the day your funds are credited to the Program Bank and will accrue up to, but not including, the day on which your funds are withdrawn. The interest rate paid on your Eligible Free Credit Balances in the Bank Sweep Deposit Program may vary and are subject to change at any time without notice. DriveWealth, in its discretion, may elect to share interest earned on Free Credit Balances invested in the Bank Sweep Deposit Program with you. The amount of interest paid to you and the applicable rate of return will be reflected in your Account statement. You may receive a higher or lower rate of return under the Bank Sweep Deposit Program then on other sweep options.

j. Conflicts of Interest. DriveWealth may earn fees based on the amount of funds deposited with the Program Bank through the Bank Sweep Deposit Program. DriveWealth may earn a higher fee if you participate in the Bank Sweep Deposit Program than if you elect other sweep options such as the Money Market Sweep. Deposits made with the Program Bank may be used by such bank to support its investment lending and other activities. The Program Bank may receive substantial deposits from the Bank Sweep Deposit Program at a price that may be less than alternative funding sources. Funds held at the Program Bank in the omnibus account provide a stable source of funds for the Program Bank.


FDIC Summary

What is the FDIC?

  • The FDIC is the Federal Deposit Insurance Company, which is an independent agency of the United States government. All FDIC insured deposits are backed by the full faith and credit of the United States government.

  • The FDIC covers insured banks located in the United States and protects individual depositors, and funds on deposit at the bank, in the event that such bank fails.

  • FDIC insurance coverage is provided to all persons with deposits at FDIC covered banks; a person does not have to be a U.S. citizen or resident in order to have his or her deposits insured by the FDIC.

FDIC Insurance Coverage

  • Insuring consumer deposits is at the core of the FDIC’s mission. The FDIC covers consumer deposits at each FDIC insured bank, dollar-for dollar, including principal and accrued interest, through the date of the bank’s closing, up to the applicable insurance limits.

  • FDIC insurance covers deposits received at an insured bank. It does not cover investments, even if they are purchased at an insured bank.

  • The standard deposit insurance amount is two hundred fifty thousand dollars ($250,000 USD) per depositor, per FDIC-insured bank, per ownership category.

Ownership Categories. FDIC insurance is provided to the following ownership categories.

Single Account

  • A deposit account owned by one person, without named beneficiaries 

  • An account established by an agent or custodian for one person, such as accounts established under the Uniform Transfers to Minors Act

  • A business account for a sole proprietorship

  • An account representing a deceased person’s funds

  • Coverage Limit: $250,000 per owner

Certain Retirement Accounts

  • Individual Retirement Accounts (IRA)

  • Self-directed defined contribution plans such as a 401k or profit sharing plan

  • Self-directed Keogh plan accounts

  • Coverage Limit: $250,000 per owner

Joint Account

  • All account owners must be living, have equal rights to make withdrawals, signed (or e-signed) the deposit account signature card

  • Coverage Limit: $250,000 per co-owner

Revocable Trust Account*

  • Coverage Limit: Owner Insured $250,000 for each unique beneficiary designated

Irrevocable Trust Account*

  • Coverage Limit: $250,000 for the trust – more coverage available if requirements are met

Employee Benefit Plan Account*

  • Coverage Limit: $250,000 for the noncontingent interest of each plan participant

Corporation, Partnership, or Unincorporated Association Account*

  • Coverage Limit: $250,000 per corporation, partnership, or unincorporated association

Government Account*

  • Coverage Limit: $250,000 per official custodian

*Account type not supported by DriveWealth.

Single Accounts. If your Account is a Single Account the FDIC will aggregate all accounts that you own at the same bank, and will insure such accounts up to the $250,000 coverage limit.

For example: If you have one brokerage account with $100,000 in Free Credit Balances swept to Bank A, a second brokerage account with $75,000 in Free Credit Balances swept to Bank A, and $90,000 on deposit in a checking account with Bank A outside of the Bank Sweep Deposit Program, then only $250,000 of your $265,000 is insured by the FDIC. 

The summary of FDIC deposit insurance laws and regulations contained herein is not intended to be a full restatement of applicable laws and FDIC regulations and interpretations. The applicable laws and FDIC regulations and interpretations may change from time to time and, in certain instances, additional terms and conditions may apply which are not described in herein. You should discuss with your attorney specific questions related to your Account including applicable FDIC insurance limits and rule interpretations. You may also write to the following address: FDIC Office of Consumer Affairs, 550 17th Street, N.W., Washington, D.C. 20429. You are also encouraged to review the FDIC’s Frequently Asked Questions which are available at www.fdic.gov for additional information. 

To opt out of the Bank Sweep Deposit Program, please contact your Introducing Firm.

DriveWealth, LLC is not a bank and is not itself an FDIC-insured institution, and FDIC deposit insurance coverage only protects against the failure of an FDIC-insured depository institution.



[1] The term "Free Credit Balance" means the uninvested cash in your Account, minus (i) funds necessary to pay for purchase transactions due to settle after funds are eligible to be swept to a Cash Feature; (ii) charges to your Account; (iii) credit balances that are designated as collateral for your obligations. 

[2] "Business Day" is any day that the New York Stock Exchange and the Federal Reserve Bank of New York are open. (Although our offices may be open on certain bank holidays, these days are not considered Business Days for purposes relating to the transfer of funds.)