Cash Management Pogram Disclosure Statement – Bank Sweep

1. Introduction

 DriveWealth offers a Cash Management Program 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 Cash Management Program and provides important disclosures about each feature.

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

The Cash Management Programs currently available through DriveWealth are as follows:

(1) The “FDIC Bank Sweep” feature which automatically sweeps your eligible Free Credit Balances into an interest bearing deposit account at our applicable Program Bank(s).

1. Your Responsibility to Monitor Program Eligibility

DriveWealth will notify you in writing if new Cash Management Programs are made available or there are material changes to the offered Cash Management Programs. It is your responsibility to monitor your eligibility for DriveWealth’s Cash Management Programs.

2. Returns and Yields

DriveWealth’s Cash Management Programs are not intended to be long-term investments. You should also consider higher-return options for your funds that are not immediately needed for investments purposes, as yields on any of our Cash Management Program options may be lower than those of similar investments or deposit accounts offered outside of DriveWealth.

3. Eligibility

In general, eligibility for DriveWealth’s Cash Management Programs are based on the ownership of the Account and applicable laws and regulations. Eligibility requirements for any Cash Management Program may change; DriveWealth will notify you in advance if any change in eligibility affects your Account.

All Accounts established at DriveWealth are currently eligible for the FDIC Bank Sweep. DriveWealth’s Cash Management Program will default to the FDIC Bank Sweep as the election for your Account. By establishing an Account, you are providing your consent to have your Free Credit Balances swept in accordance with the FDIC Bank Sweep. The availability of Cash Management Programs may vary based on where you live and DriveWealth’s relationship with your Introducing Broker or Advisor.

DriveWealth may, at its sole discretion and without prior notice to you, suspend or terminate your Account’s participation in a specific Cash Management Program. 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.


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. “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.)

4. Changes to the Cash Management Program

You understand and agree that DriveWealth may: (i) make changes to the terms and conditions of our Cash Management Program; (ii) make changes to the terms and conditions of any Cash Management Program; (iii) change, add, or discontinue any Cash Management Program; (iv) change your investment from one Cash Management Program to another program if your Account becomes ineligible for your current Cash Management Program or your Cash Management Program is discontinued; and (v) make any other changes to the Cash Management Program as allowed by applicable laws and regulations. DriveWealth will notify you in writing of changes to the terms of our Cash Management Program 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.

5. FDIC Bank Sweep Program

a. Program Description. The FDIC Bank Sweep Program automatically sweeps your eligible Free Credit Balances into an interest- bearing deposit account (“Deposit Account”) held at one or more participating banks (“Program Bank(s)”). You will not have a direct account relationship with the Program Bank(s) unless you have a separate account with such bank outside of the FDIC Bank Sweep 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 FDIC Bank Sweep Program and no ongoing minimum balance requirement. There is also no minimum period that your eligible funds must remain on deposit with a Program Bank and no limitation as to the number of, or aggregate value, of withdrawals that DriveWealth may affect under the FDIC Bank Sweep Program.

b. FDIC Insured Accounts. The FDIC Bank Sweep 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 a Program Bank under the FDIC Bank Sweep, 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 a Program Bank outside of the FDIC Bank Sweep Program will not be taken into account in determining whether to sweep you eligible Free Credit Balances to the Program Bank(s). You are solely responsible for monitoring the aggregate amount that you have on deposit with the Program Bank(s) 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.

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 FDIC Bank Sweep Program are not covered by SIPC.

d. Your Responsibility. Neither DriveWealth nor the Program Bank(s) 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 FDIC Bank Sweep Program you authorize DriveWealth to automatically sweep your eligible Free Credit Balances to the Program Bank at the end of each Business Day².

f. Withdrawals and Access to Funds. By participating in the FDIC Bank Sweep Program you authorize DriveWealth to automatically withdrawal your funds on deposit at the Program Bank, as needed, in order to satisfy a debt in your Account, to reconcile a buy trades in your Account or, if applicable, to provide the necessary collateral to your margin account at any time. You understand that you cannot withdrawal your funds directly with the Program Bank(s); all withdrawals are processed through your Account and as part of the FDIC Bank Sweep 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 FDIC Bank Sweep transactions will appear on your periodic Account statements in lieu of separate confirmations. You will not receive a separate statement from the Program Bank(s).

h. Program Bank Information. DriveWealth’s FDIC Bank Sweep utilizes the following Program Banks: Texas Capital Bank, N.A. Each Program Bank is a federal savings bank and an FDIC-insured depository institution. You can obtain publicly available information about each 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 FDIC Bank Sweep 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 a separate evidence of ownership from the 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 FDIC Bank Sweep. 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 FDIC Bank Sweep 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 FDIC Bank Sweep 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 FDIC Bank Sweep Program then on other sweep options.


²  “Business Day” is any day that the New York Stock Exchange and the Federal Reserve Bank of New York are open for business. Although DriveWealth’s offices may be open on certain bank holidays, these days are not considered a Business Day for purposes relating to the transfer or funds in the Cash Management Program.

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

Ownership Category

Coverage Limit

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

$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

$250,000 per owner

foJoint Account
– all account owners must be living, have equal rights to make withdrawals, signed (or e-signed0 the deposit account signature card

$250,000 per co-owner

Revocable Trust Account*

Owner Insured $250,000 for each unique beneficiary designated

Irrevocable Trust Account*

$250,000 for the trust – more coverage available if requirements are met

Employee Benefit Plan Account*

$250,000 for the noncontingent interest of each plan participant

Corporation, Partnership, or Unincorporated Association Account*

$250,000 per corporation, partnership, or unincorporated association

Government Account*

$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 FDIC Bank Sweep, 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.