Customer Account Agreement - Margin
This Agreement sets forth the terms and conditions under which DriveWealth, LLC (“DriveWealth”) will maintain an account (including one or more margin accounts, as applicable, “Account(s)” or “your Account(s)”) for the Account Holder(s) set forth below (all or any of which shall be hereinafter referred to as “Account Holder”, “you” “your” or “yours”), and receive orders for the purchase and sale of financial products including, without limitation, securities and other assets (“Securities and Other Assets”). The terms of this Agreement govern your margin account(s). This Agreement shall not become effective until accepted by DriveWealth, and such acceptance may only be evidenced by internal records maintained by DriveWealth. This Agreement supersedes any previous agreements you may have made individually with DriveWealth regarding your Account, and if it is held jointly or in other combinations, it supersedes any previous agreements made with DriveWealth by the same parties regarding their Accounts to the extent the subject matter is covered by this Agreement.
- Applicable Laws and Regulations. All transactions in your Account shall be subject to all applicable U.S. laws, and the rules and regulations of applicable federal, state and self-regulatory agencies, including but not limited to, the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the U.S. Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (“FINRA”), and the constitution, rules, regulations, customs and usages of the exchanges, markets and clearing agencies where transactions are executed, cleared and settled for your Account (“Applicable Law”).
- Non-disclosure of Confidential and Material, Nonpublic Information. DriveWealth and its affiliates provide a variety of services. In connection with providing these services, employees of DriveWealth and its affiliates may come into possession, from time to time, of confidential and material, nonpublic information. You understand and agree that, in certain circumstances, employees of DriveWealth and its affiliates will have knowledge of certain confidential and material, nonpublic information which, if disclosed, might affect your decision to buy, sell or hold a security, but that they shall be prohibited from communicating such information to you. You also understand and agree that DriveWealth shall have no responsibility or liability to you for failing to disclose such information to you as a result of following those of its policies and procedures that are designed to provide reasonable assurances that it is complying with Applicable Law.
- Services Provided by DriveWealth. You agree that DriveWealth may provide certain services to you with or through its affiliates. All rights and limitations on liability and obligations of DriveWealth in this Agreement are for the benefit of DriveWealth and each of its present and future affiliates, which, for those purposes, shall be third party beneficiaries of this Agreement.
- Background Checks. You authorize DriveWealth and any agent it selects to conduct background checks concerning you, and to use, verify and confirm any and all information provided. You also authorize DriveWealth, and any of its or their affiliates, to share among themselves such information and any other confidential information DriveWealth or its affiliates may have about you or your Accounts. You agree that without notifying you, DriveWealth and its agents may conduct additional background checks in connection with any review, renewal or extension of your Account.
- Transfer of Securities and Other Assets into Account. You agree that all Securities and Other Assets deposited into your Account will be in Good Deliverable Form. “Good Deliverable Form” means that the Securities and Other Assets are freely transferable, properly endorsed, registered and fully negotiable. You agree to give DriveWealth timely and accurate information relating to any restrictions on the sale or transfer of any Securities and Other Assets, including restrictions on the sale or transfer of any Securities and Other Assets that are subject to restrictions on resale under Applicable Law, contract or otherwise, including without limitation, Securities and Other Assets subject to Rules 144 or 145(d) under the Securities Act of 1933 (“Restricted Securities”). You further agree to timely satisfy all legal transfer requirements and to furnish all necessary documents before and after Securities and Other Assets are transferred.
- Your Responsibility for Your Account. 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.
- Payment and Settlement. You agree that you will pay for any Securities and Other Assets purchased for your Account on or before the settlement date set forth on the confirmation for that transaction or, if earlier, the standard settlement date in the market on which those securities are traded. DriveWealth may, in its discretion, permit you to purchase Securities and Other Assets without free credit balances in your Account. You further agree that each item sold in the Account will be delivered to DriveWealth in Good Deliverable Form on or before settlement date. Proceeds of any sale will not be paid to you before the time at which DriveWealth has received the Securities and Other Assets in Good Deliverable Form and the settlement of the Securities and Other Assets is complete. You agree that in the event that any transaction denominated in a foreign currency is entered into on your behalf or that your Account receives a dividend payment denominated in a foreign currency: (i) any profit or loss arising from a fluctuation in the exchange rate affecting such currency will be entirely for your Account and risk, (ii) all initial and subsequent deposits for margin purposes shall be made in U.S. dollars, in such amounts as DriveWealth may, in its sole discretion, require, and (iii) DriveWealth is authorized to convert funds in your Account into and from such foreign currency at a rate of exchange determined by DriveWealth, in its sole discretion, on the basis of then prevailing money markets, and you will reimburse DriveWealth for any expenses incurred in connection therewith.
- Rule 144 or 145(d) Restricted or Control Securities. Prior to placing an order for the sale or transfer of Restricted Securities, you agree that DriveWealth must be advised of the status of the securities and furnished with the necessary documents (including opinions of legal counsel, if DriveWealth so requests) or any other required waivers or consents necessary to satisfy legal transfer requirements. These securities may not be sold or transferred until they satisfy legal transfer requirements. Even if necessary documents are furnished in a timely manner, there may be delays in the processing of these securities, which may result in delays in the delivery of securities and the crediting of cash to your Account. You are responsible for, and shall reimburse DriveWealth for, any delays, expenses, losses and damages (including reasonable attorneys’ fees and court costs and expenses) (“Losses”) incurred by DriveWealth that are associated with compliance or failure to comply with all of the requirements and rules relating to Restricted Securities.
- Abandoned Property. If your account statement is returned to DriveWealth as undeliverable for three (3) consecutive statement periods, and DriveWealth is unable to contact you through reasonable efforts, your account assets may be deemed to be abandoned property and a quarterly abandoned account safekeeping fee may be charged to your account.
- Internet Communications. DriveWealth will take measures that it believes appropriate to protect the confidentiality of information that it transmits to you over the Internet. You acknowledge, however, that the Internet is not a secure network and that communications transmitted over the Internet may be accessed by unauthorized or unintended third parties. You acknowledge that you should not transmit any personal or identifying information (such as account numbers, credit or debit card numbers, Social Security numbers, passport or visa numbers or Passwords) via the Internet unless you are certain that the transmission will be secure and encrypted. You further acknowledge that DriveWealth may be unable to assist you with problems that result from difficulties that you may encounter while logging on to or accessing your electronic communications via the Internet.
- Finality and Transmittal of Reports, Statements and Notices. Confirmations of transactions and statements of your Account shall be binding if you do not object, in writing, within three calendar days in the case of confirmations and ten calendar days in the case of statements after transmittal to you by electronic delivery or otherwise. Notices or other communications, including confirmations, account statements and margin calls, transmitted to you at the email address provided by you, until DriveWealth has received actual notice in writing of a different email address, be deemed to have been personally delivered to and received by you, and you agree to waive all claims resulting from any failure to receive such communications.
- Communications with DriveWealth. You agree that DriveWealth may designate the manner in which you must send different types of communications (including changes in your contact information) to DriveWealth and the addresses to be used for that purpose. DriveWealth need not act upon any communications transmitted in a manner inconsistent with such designations, and DriveWealth shall be permitted a reasonable amount of time, as appropriate under the circumstances, to act in response to any communications if it elects to do so. DriveWealth will have no liability for relying on any directions from, or document signed by, any person that DriveWealth reasonably believes to be you or to be authorized by you to give the direction or sign the document, whether or not the person has the authority to do so.
- Oral Authorization. You hereby agree that DriveWealth shall incur no liability in acting upon oral instructions given to it concerning your Account, provided such instructions reasonably appear to be genuine. DriveWealth, however, reserves the right to require that you make requests for any transaction or for any withdrawal from your Account, in writing.
- Power of Attorney or Trading Authorization to Third Party. If you grant a power of attorney or trading authorization to a third party with respect to the Account, you agree that DriveWealth may follow the instructions of that third party in accordance with the authorization. You shall indemnify and hold DriveWealth harmless from and pay promptly any and all Losses arising there from or debit balance due thereon. This indemnity shall be in addition to, and in no way limit or restrict, any rights which DriveWealth may have under such power of attorney or trading authorization or under this or any other agreement between you and DriveWealth, or otherwise. DriveWealth may, with respect to questions of law, apply for and obtain the advice and opinion of counsel, at its expense, and shall be fully protected with respect to anything DriveWealth does or refrains from doing in good faith in conformity with such advice or opinion.
- Information and Data. DriveWealth may make available information and data about securities and investment products, including information and data prepared by others. None of this information is personalized or in any way tailored to reflect your personal financial circumstances or investment objectives and the securities or investment strategies discussed might not be suitable for you. Therefore, you should not view the fact that DriveWealth is making this information available to you to be a recommendation to you of any particular security or investment strategy. You agree that DriveWealth has no responsibility for determining the suitability of any transactions for you. Further, you may not re-distribute such information and data without the prior approval of the appropriate party.
- Security Interest and Lien. You agree that DriveWealth will have a continuing security interest in all Securities and Other Assets in which you have an interest, including any after-acquired property, held by or carried by it or its agents in your Account, as security for payment of all your existing or future obligations and liabilities to DriveWealth, without regard to whether DriveWealth has made loans with respect to such Securities and Other Assets. All such Securities and Other Assets shall be subject to a first, perfected and prior lien, security interest and right of set-off and are held as security by DriveWealth or its agents for the discharge of any indebtedness or any other obligation you may have to DriveWealth, however such obligation may have arisen. In enforcing its security interest, DriveWealth shall have the discretion to determine which Securities and Other Assets are to be sold and the order in which they are to be sold and shall have all the rights and remedies available to a secured creditor under the Uniform Commercial Code of New Jersey as then in effect, in addition to the rights and remedies provided herein or otherwise by Applicable Law.
- Sell-Outs, Buy-Ins and Cancellation of Orders. DriveWealth is authorized in case of your death or whenever, in its discretion, DriveWealth deems it necessary or appropriate for its protection, without notice to you or your personal representative, and without regard to any tax or other consequences to you, to sell any and all Securities and Other Assets in your Account (either individually or jointly with others) to borrow or buy in any or all Securities, and Other Assets which may be short in such Account, or to cancel all outstanding transactions and to offset any indebtedness in your Account against any other account you may have (either individually or jointly with others). Any such sales or purchases may be made at DriveWealth’s sole discretion on any exchange or market where such business is usually transacted, or at public auction or private sale; and DriveWealth may be the purchaser for its own account. Such sales or purchases may be public or private and may be made without notice or advertisement and in such manner as DriveWealth may, in its discretion, determine. It shall be understood that a prior demand, or call, or prior notice of the time and place of such sale or purchase shall not be considered a waiver of DriveWealth’s right to sell or buy without demand or notice as provided herein. At any such sale or purchase, DriveWealth may purchase or sell the property free of any right of redemption, and you agree to be liable for any deficiency in your Account. If the proceeds from such purchase or sale satisfy your indebtedness to DriveWealth, any money or Securities and Other Assets in your Account in excess of your indebtedness to DriveWealth will be held for your Account.
- Order Execution. You agree that, subject to the terms of an order, the method of execution of that order is in the sole discretion of DriveWealth. DriveWealth may reject and pre-review your orders or take any other action (which may delay the execution of the order) for any reason, including market conditions, system outages, capacity limitations, pending proprietary or customer orders in the same security, regulatory restrictions and restrictions imposed by DriveWealth with respect to transactions in the particular security.
- Capacity. You understand that, in connection with purchase and sale transactions in your Account, DriveWealth is acting in an agency capacity unless DriveWealth notifies you, in writing, before the settlement date for the transaction that DriveWealth is acting as a dealer for its own account or as agent for another party. Unless DriveWealth has expressly agreed otherwise, DriveWealth is not acting as a financial adviser or fiduciary with respect to your Account or any related transactions.
- Federated Investors, Inc. and Money Market Funds. Through an agreement with Federated Investors, Inc., DriveWealth is making available a money market fund into which your Account’s free credit balances will be swept. Free credit balances include uninvested deposits, dividends and interest, and funds from transactions, such as sales of stocks. The money market is the Federated Prime Cash Obligations Fund. Your free credit balances are automatically swept into the Federated Prime Cash Obligations Fund. The timing and amounts to be swept will be set according to the terms of the cash sweep feature. Credit balances that are needed to satisfy a settling transaction are not free and are not available for the cash sweep feature. All sweep transactions will appear on your periodic Account statements. These Account statements indicating sweep transactions are provided in lieu of separate confirmations. Minimum investment requirements may exist for the sweep vehicle and money market fund, and also for the various classes within a money market fund. DriveWealth will provide notice to you as part of your (at least) quarterly statement that the balance in the sweep program can be liquidated at your order and returned to you. Also, DriveWealth will provide notice to you before (1) making changes to Terms & Conditions of the sweep program, (2) making changes to the Terms & Conditions of a product currently available through the sweep program, (3) changing, adding or deleting products available through the sweep program or (4) changing the customer’s investment through the sweep program from one product to another. The restrictions, charges, and expenses that investments in the money market fund are subject to will be described in a prospectus delivered to you, which you should read carefully.
- Industrial and Commercial Bank of China Financial Services LLC (“ICBCFS”) as Custodian. You authorize ICBCFS to serve as custodian and to select appropriate third parties as custodians for the Securities and Other Assets in your Account and to register any Securities and Other Assets in your Account in the name of ICBCFS or any nominee, including sub-custodians, or to cause the Securities and Other Assets to be registered in the name of, or in the name of any nominee of, a recognized depository clearing organization.
- ICBCFS as Clearing Agent. Because ICBCFS carries your Account solely as clearing agent for DriveWealth, you hereby acknowledge and agree that:
- Unless ICBCFS receives from you a written notice to the contrary, ICBCFS shall accept from DriveWealth, without any inquiry or investigation by it (i) orders for the purchase or sale in your Account of Securities and Other Assets on margin or otherwise, and (ii) any other instructions concerning said Account.
- You understand and agree that ICBCFS shall have no responsibility or liability to you for any acts or omissions of DriveWealth, its officers, employees or agents, and that ICBCFS’s sole responsibilities to you relate to the clearing and bookkeeping of transactions in your Account.
- You agree that the rights that DriveWealth has under this Agreement, including but not limited to the right to collect any debit balance or other obligations owing in any of my accounts, whether by selling securities to satisfy a margin call or otherwise, may be assigned to a third party so that DriveWealth may collect from you.
- On your customer statements you will be provided, pursuant to FINRA Rule 4311, a notice which serves to explain the contractual relationship between DriveWealth and ICBCFS and the roles and responsibilities of each with respect to your Account(s).
- You acknowledge your understanding that, unless ICBCFS provides you written notice to the contrary, ICBCFS and DriveWealth are not affiliated, are not parent and subsidiary, and are separate broker-dealers for all purposes, including regulatory and capital. DriveWealth is not an agent of ICBCFS. ICBCFS accepts from DriveWealth orders and instructions related to your account and ICBCFS does not approve the opening of your Account(s) or the suitability of margin for you. ICBCFS does not give any investment advice, make suitability determinations, or supervise or oversee DriveWealth or its employees.
- Deposits on Cash Transactions. If at any time DriveWealth considers it necessary or appropriate for its protection, it may, in its discretion, require you to deposit cash or collateral in your Account to assure due performance by you of your open contractual commitments.
- Debit Balances. DriveWealth may charge you interest on debit balances in your Account, in accordance with DriveWealth’s established rules and policies, as disclosed to you in the Truth in Lending Statement (the “Truth-in-Lending Statement”), or as otherwise agreed with you. In this Agreement, “Debit Balances” means Account balances representing money owed to DriveWealth. You agree to satisfy, promptly upon demand, any indebtedness, to pay any Debit Balance in your Account, and to satisfy all other outstanding obligations relating to your Account.
- Fees and Charges. You understand that DriveWealth may charge commissions and other fees for execution of transactions to purchase and sell Securities and Other Assets, and for performing other services or processing other transactions, and you hereby agree to pay such commissions and fees at then prevailing rates (a listing of fees is at Fees). You also understand that such commission and fee rates may be changed from time to time without notice to you, and you agree to be bound thereby.
- “Long” and “Short” Sales; Authorization to Purchase or Borrow Securities. When placing any order to sell securities short, you are responsible for designating the order as such. In placing any long sell order, you will designate the order as such. The designation of a sell order as being “long” shall constitute a representation by you that (i) you own the security with respect to which the sale order has been placed and (ii) if DriveWealth does not have the security in its possession at the time you place the sell order, you shall deliver the security to DriveWealth by settlement date in Good Deliverable Form. If you fail to deliver securities to DriveWealth in connection with a long sale, you authorize DriveWealth to purchase for your account (buy in) all or a part of the securities sold. In any event, you agree to pay to DriveWealth any losses and expenses it may incur or sustain as a result of DriveWealth’s failure to settle any such transaction on your behalf and for any Losses which DriveWealth may sustain because of its inability to purchase or borrow the security sold. You further agree to provide DriveWealth with information concerning any securities borrowing arrangements made by you and/or DriveWealth in connection with any short sales. You also agree that DriveWealth may, at any time before or after settlement date, in its discretion, immediately cover any short sales in your Account by buying the subject securities. Short sales may only be affected in a margin account.
- “Locates” of Borrowed Securities. To the extent that DriveWealth provides a “locate” to you in connection with a short sale, you acknowledge that this is simply an indication that, as of the time the locate is obtained, it appears that securities will be available for borrowing on the settlement date. A locate is not a guarantee that securities will actually be available for lending and delivery on the settlement date or that the lender will not thereafter require the return of the borrowed securities.If securities sold short by you are not available for borrowing for any reason by the settlement date, in addition to its other remedies, DriveWealth may, without further notice to you, buy-in the securities that were not timely delivered and you will be responsible for all Losses and costs of the buy-in.
- Mandatory Close-Out of Short Sales. Applicable Law generally requires DriveWealth to close-out a short sale of equity securities by buying the subject securities that were sold short at the commencement of trading on the business day after the normal settlement date if delivery of the securities did not occur on settlement date, and an exemption from the close-out requirement is not available. The close-out may be affected by DriveWealth purchasing the securities for cash or guaranteed delivery of like kind and quantity.If an exemption from mandatory close-out requirements contained in Applicable Law is available to you, you must affirmatively represent and provide supporting documentation to DriveWealth at the time of placing the order in order to preclude the possible application of the mandatory close-out requirement. DriveWealth may be required to effect a close-out mandated by Applicable Law whether or not a “locate” was obtained and whether or not a buy-in notice was issued.
- Short Positions Marked to Market. Short positions will be “marked to the market”. If the aggregate value of all securities sold by you appreciates, an amount equal to such appreciation will be transferred from your general margin type to your short type resulting in a debit entry in the general margin account. If the aggregate value of all the securities sold short depreciates, an amount equal to such decline will be transferred from your short type to your general margin type resulting in a credit entry in the general margin type. The closing price from the previous business day is used to determine any appreciation or depreciation in the market value of any security sold short.
- Receipt of Truth-in-Lending Statement. You hereby agree to pay interest, to the extent not prohibited by the laws of the State of New Jersey, upon all amounts advanced and other balances due in your Account in accordance with DriveWealth’s Truth-in-Lending Statement pursuant to SEC Rule 10b-16, enclosed herewith and incorporated herein by reference. You hereby acknowledge receipt of the Truth in Lending Statement and that, having read the same, you understand and agree that interest will be charged on any debit balances in accordance with the methods described in the Truth-in-Lending Statement or in any amendment or revision thereto which may be provided to you.
- Collateral and Interest Charges in Margin Account. You agree to maintain such collateral in your Account in such form and amounts as may be required by Applicable Law, DriveWealth’s own margin policies and procedures or as DriveWealth may, in its sole discretion, require from time to time. You agree to pay on demand any debit balance owing with respect to your Account and that you shall be liable for any deficiency remaining in such Accounts in the event of liquidation thereof. Failure to make such payment shall constitute a breach of this Agreement, and DriveWealth may take such action as it considers necessary or appropriate for its protection in accordance with this Agreement. You agree that DriveWealth is not obligated to request additional collateral in the event your Account falls below such margin maintenance requirements and there may be circumstances where DriveWealth will liquidate Securities and Other Assets in the Account (including Securities and Other Assets in a cash account or other non-margin account) without notice to you to ensure that margin requirements are satisfied.
- Customer’s Consent to Loan or Pledge of Securities. You hereby authorize DriveWealth to lend either to itself or others any Securities and Other Assets held by DriveWealth or ICBCFS in your Account and to carry all such Securities and Other Assets in its general loans, and such Securities and Other Assets may be pledged, repledged, loaned, hypothecated or rehypothecated either separately or in common with other such Securities and Other Assets for any amounts due to DriveWealth thereon or for a greater sum, and DriveWealth shall have no obligation to retain a like amount of similar Securities and Other Assets in its possession and control. You understand and agree that if securities in your Account are loaned to anyone other than DriveWealth, you may lose your right to vote such securities. In the event that you no longer maintain a debit balance or any other indebtedness to DriveWealth, it is understood that DriveWealth will fully segregate all Securities and Other Assets in your Account in DriveWealth’s safekeeping or control (directly or through a clearinghouse) and deliver them to you upon request.
- Eligible Securities. DriveWealth may from time to time determine that certain Securities and Other Assets are ineligible for margin credit. DriveWealth reserves the right, at its sole discretion, not to extend margin on any Securities and Other Assets for any reason, or to change margin requirements at any time without notice to you.
- Restricted Securities as Collateral. You agree that all Securities and Other Assets you deposit in your Account as collateral for any loan you may obtain from DriveWealth will be in Good Deliverable Form. If you deposit Restricted Securities in violation of this Agreement and you do not, upon demand, promptly replace such Restricted Securities with Securities and Other Assets that are satisfactory to DriveWealth, or pay in full the margin loan secured by such Restricted Securities, you agree that you will be in default under this Agreement and DriveWealth may, without prejudice to its other rights and remedies at law and in equity, take any and/or all of the following actions:
- Liquidate Collateral. Liquidate any Securities and Other Assets or, to the extent permitted by Applicable Law, any Restricted Securities held in your margin account, or any other Account with DriveWealth in which you have an interest, to satisfy the debit balance secured by the Restricted Securities;
- Set Off. Set off against the debit balance secured by such margin loan any amounts held in any other Accounts you maintain with DriveWealth;
- Default Rate of Interest. Until such time as the default is cured and in substitution for any other rate of interest specified in this Agreement, charge interest at the default rate of 24% per annum on the debit balance of all Accounts which you maintain with DriveWealth and debit such Accounts from time to time for such interest (provided, however, that you acknowledge that in no event does DriveWealth intend to charge a rate of interest in excess of the maximum rate permitted under Applicable Law and, in the event such rate of interest is in excess of the permitted rate, DriveWealth agrees that any excess interest so charged shall at DriveWealth’s option be returned to you or applied to your Account);
- Demand Immediate Payment. Demand immediate payment in full of the margin loan secured by such Restricted Securities; or
- Other Remedies. Assert any other remedies available to DriveWealth under Applicable Law to collect all amounts that you owe to DriveWealth.
- Tax Treatment of Payments In Lieu of Dividends. The Internal Revenue Code generally provides that, subject to certain requirements, dividends paid to a U.S. individual shareholder from domestic corporations and certain foreign corporations are subject to tax at the reduced rates applicable to long-term capital gains. These dividend payments are considered qualified dividends subject to certain holding period requirements. DriveWealth has the right to rehypothecate the shares in your Account. Consequently as a result of the rehypothecation the IRS requires that some or all of the dividend payments you may receive are considered substitute payments in lieu of dividends. Any substitute payments in lieu of dividends will appear on Form 1099-MISC Box 8 of your Consolidated 1099 Form instead of Form 1099-DIV Box 1b “Qualified Dividends”. Accordingly, you understand that the Account may receive substitute payments in lieu of dividends rather than qualified dividends, which are taxed at ordinary income tax rates, and DriveWealth, shall not be responsible to you for any additional taxes or other costs you incur for receipt of substitute payments in lieu of dividends. You should consult with your tax adviser if you have any questions relating to substitute payments in lieu of dividends.
- Non-Individual Certification. If this is an agreement for a trust, other fiduciary account, or other non-individual account, you hereby certify and represent to DriveWealth that the use of a margin account and specifically the borrowing, lending and pledging of Securities and Other Assets as described herein is in accordance with and authorized by the provisions of the trust or other instrument and Applicable Law governing the trust or other entity.
- Tax Consequences and Related Information: Non-U.S. Tax Obligations. If you are not a United States-based entity, or are otherwise subject to the jurisdiction of a tax authority other than the Internal Revenue Service, you may be subject to laws, rules, regulations, withholding requirements, tax payments and other obligations related to your account, the transactions therein, and the amounts you pay to DriveWealth for the services provided hereunder (“Foreign Tax Rules”). You agree that, notwithstanding the letter of those Foreign Tax Rules, you shall be liable and responsible for compliance therewith, and shall indemnify and hold harmless DriveWealth from and against any tax obligations or penalties incurred by you or DriveWealth in connection therewith.
- Transfer of Excess Funds; Exchange Rate Fluctuations. You hereby authorize DriveWealth to transfer excess funds from your Accounts to any of your other Accounts for any reason, such as to avoid a margin call, not in conflict with the Commodity Exchange Act.
- Satisfaction of Indebtedness; Termination. You may terminate this Agreement at any time by written notice to DriveWealth Attention: New Accounts Group, 97 Main Street 2nd Floor, Chatham, N.J. 07928. You agree to satisfy, on demand, any indebtedness, and to pay any debit balance remaining, when your Account is closed. Your Account may not be closed without DriveWealth first receiving all Securities and Other Assets for which your account is short and all funds to pay in full for all Securities and Other Assets in which your Account is long. DriveWealth may at any time, with or without notice to you, terminate your Account or any of its features or change their nature, composition or availability. Termination of the Account or any feature will be effective immediately or at a later time if so specified by DriveWealth, except that the relevant parts of this Agreement will remain in effect with respect to all transactions then outstanding.
- Costs of Collection. In the event that DriveWealth employs counsel or a collection agency to collect any indebtedness which you owe, you agree to pay the reasonable costs of collection, including but not limited to attorneys’ fees, court costs and expenses incurred by DriveWealth in connection with its efforts to collect monies owed to it.
- Voting of Proxies for Securities in Your Account. DriveWealth may, in accordance with Applicable Law, vote proxies for securities DriveWealth holds as your nominee where DriveWealth has not received voting instructions from you on a timely basis. You agree that DriveWealth will not be responsible or liable for failing or refraining to vote any proxies where DriveWealth has not received proxies or related shareholder communications on a timely basis.
- Waiver, Assignment and Modification. You agree that DriveWealth may change the terms of this Agreement by giving you notice of the new terms. You agree that you and your Account will be bound by the changes through any subsequent use of your Account, or if you do not close your Account, within fifteen (15) calendar days of being notified of the changes. Except as specifically permitted in this Agreement, no provision of this Agreement will be deemed waived, altered, modified or amended unless agreed to in writing by DriveWealth. DriveWealth’s failure to insist on strict compliance with this Agreement or any other course of conduct on our part will not be deemed a waiver of DriveWealth’s rights under this Agreement. You may not assign this Agreement to any third party without the written consent of DriveWealth. Any assignment in violation of this Agreement shall be void. DriveWealth may assign any of its rights and obligations in this Agreement to its affiliates and successors without giving you notice.
- New Jersey Law to Govern. This Agreement shall be deemed to have been made in the State of New Jersey and shall be construed, and the rights and liabilities of the parties determined, in accordance with the laws of the State of New Jersey without giving effect to the choice of law or conflict of law provisions thereof.
- Restrictions on Trading. You understand that DriveWealth may, in its sole discretion, prohibit or restrict trading of Securities and Other Assets or substitution of Securities and Other Assets in the Account.
- Binding upon Customer’s Estate. If you are a natural person, you agree that your estate shall promptly notify DriveWealth in writing of your death and your guardian shall promptly notify DriveWealth in writing upon your incompetence. You hereby agree that this Agreement and all the terms thereof shall be binding upon your heirs, executors, administrators, guardians, personal representatives and permitted assigns.
- Age and Employment Affiliations. If an individual, you represent that you are of the age of majority. You also represent that you are not (a) an employee of, or affiliated with any national securities exchange or the FINRA, another member firm of a national securities exchange or the FINRA, or a bank, trust company or insurance company, or (b) a director, 10% beneficial shareholder, policy-making officer, or otherwise an affiliate (as that term is defined in Rule 144 under the Securities Act of 1933) of a publicly traded-company, unless you have notified DriveWealth to that effect, and that you will promptly notify DriveWealth if you become so employed or affiliated.
- Severability, Non-Waiver. If any provision of this Agreement is held to be invalid, void or unenforceable by reason of any law, rule, administrative order or judicial decision, that determination shall not affect the validity of the remaining provisions of this Agreement.
- Entire Understanding. This Agreement together with any other agreements you and DriveWealth enter into, as amended or supplemented from time to time, relating to the Account or to particular products or services, any procedures established by DriveWealth with respect to the use of the Account and terms contained on statements and confirmations sent to you by or on behalf of DriveWealth, contain the entire understanding between you and DriveWealth concerning the subject matter of this Agreement.
- Shareholder Communications. Under SEC Rule 14b-1(c), DriveWealth is required to disclose to an issuer, upon request, the name, address and security positions of account holders who are beneficial owners of that issuer’s securities unless the account owner specifically objects to such disclosure.
- Joint Account (Applicable to Joint Accounts Only).
- You agree that each of you has the authority on behalf of this Account to buy, sell (including short sales) and otherwise deal in Securities and Other Assets; to receive for the Account confirmations, statements and other communications of every kind; to receive and dispose of the Account Securities and Other Assets; to make for the Account agreements relating to these matters and to terminate or modify them or waive any of the provisions thereof; and generally to deal with DriveWealth as if each of you alone were the owner of the Account, all without notice to the other joint Account owner(s). Your liability for the Account shall be joint and several.
- You agree that DriveWealth may follow the instructions of any of you concerning this Account and make deliveries to any of you of any or all Securities and Other Assets in your Account, and make payments to any of you of any or all monies in the Account, as any of you may order or direct, even if such deliveries and payments shall be made to one of you personally, and not for the Account. DriveWealth shall be under no obligation to inquire into the purpose of any such demand for delivery of Securities and Other Assets or payment, and shall not be bound to see to the application of disposition of the Securities and Other Assets and monies so delivered or paid to any of you.
- In the event of the death of any of you, the survivor(s) shall immediately give DriveWealth written notice thereof, and DriveWealth may, before or after receiving such notice, take such action, require such documents, retain such portion or restrict transactions in the Account as it may deem necessary or appropriate to protect itself against any tax, liability, penalty or loss under any present or future laws or otherwise. The estate of any of you who shall have died shall be liable and each survivor will be liable, jointly and severally, to DriveWealth for any debt or loss in this Account resulting from the completion of transactions initiated prior to DriveWealth’s receipt of a written notice of such death or incurred in the liquidation of the Account or the adjustment of the interests of the respective parties.
- Any taxes or other expenses becoming a lien against or payable out of the Account as the result of the death of any of you, or through the exercise by the estate or representatives of any rights in the Account shall be chargeable against the interest of the survivor(s) as well as against the interest of the estate of the decedent. This provision shall not release the decedent’s estate from any liability provided for in this Agreement.
- Laws regulating joint ownership of property vary.
- Bankruptcy or Attachment. You agree to promptly notify DriveWealth in writing in the event of your bankruptcy or insolvency, and if you are not a natural person, of your reorganization, dissolution, termination or similar condition involving you or your parent company. If your Account is a joint account with two or more owners, each person indicated in the title to the Account who executes this Agreement (each, a “Joint Owner”), agrees to give DriveWealth written notice in the event of bankruptcy, insolvency, reorganization, dissolution or similar condition of any other Joint Owner. In the event that: (a) DriveWealth is advised of the involuntary application for protection under the applicable bankruptcy laws or the appointment of a receiver for you or your parent company or otherwise is informed of the insolvency, reorganization, dissolution or similar condition of you or your parent company or (b) DriveWealth is served with any lien, levy, garnishment or similar process with respect to you or your Account, then DriveWealth may, but is not required to, immediately take any action which DriveWealth in its sole discretion may believe necessary or appropriate for its own protection, including without limitation, selling out any positions in your Account to satisfy any obligations you have to DriveWealth, without regard to any tax or other consequences of such action to you, with or without notice to you and without liability therefore.
- LIMITED LIABILITY. DRIVEWEALTH SHALL NOT BE LIABLE IN CONNECTION WITH THE ENTERING, EXECUTION, HANDLING, SELLING OR PURCHASING OF SECURITIES AND OTHER ASSETS OR TAKING ANY OTHER ACTION FOR YOUR ACCOUNTS, EXCEPT FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON ITS PART. DRIVEWEALTH’S LIABILITY IN ANY SUCH EVENT SHALL BE LIMITED TO ACTUAL DAMAGES PROVEN WITH REASONABLE CERTAINTY, RESULTING SOLELY AND DIRECTLY FROM SUCH GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, THAT ARE PROVEN TO HAVE BEEN WITHIN THE CONTEMPLATION OF THE PARTIES AS OF THE DATE OF EXECUTION OF THIS AGREEMENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, DRIVEWEALTH SHALL NOT BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR OTHER LOSSES (REGARDLESS OF WHETHER SUCH DAMAGES OR LOSSES WERE REASONABLY FORESEEABLE).
- Indemnity. DriveWealth shall not be liable for and you agree to reimburse, indemnify and hold DriveWealth and each of its directors, officers and employees and any person controlling or controlled by DriveWealth harmless from Losses that result from: (a) you or your agent’s misrepresentation, act or omission or alleged misrepresentation, act or omission, (b) DriveWealth’s following your or your agent’s directions or failing to follow your or their unlawful or unreasonable directions, (c) any of your actions or the actions of your previous advisers or custodian, and (d) the failure by any person not controlled by DriveWealth to perform any obligations to you.
- Force Majeure. DriveWealth shall not be liable for losses caused directly or indirectly by government restrictions, exchange or market rulings, suspension of trading, war, acts of terrorism, strikes, failures of the mails or other communications systems, mechanical or electronic failure, failure of third parties to follow instructions, for other causes commonly known as “acts of God”, or for any other cause not reasonably within DriveWealth’s control, whether or not such cause was reasonably foreseeable. DriveWealth shall not be liable for losses caused by general market conditions that were not directly related to DriveWealth’s violation of this Agreement.
- Headings. The heading of each provision of this Agreement is for descriptive purposes only and shall not be deemed to modify or qualify any of the rights or obligations set forth in each such provision.
- Counterparts. This Agreement may be executed in any number of counterparts by you, each of which will constitute an original, and all of which, when taken together, shall constitute one and the same instrument.
- SIPC. DriveWealth is a member of the Securities Investor Protection Corporation (“SIPC”). SIPC currently protects the securities and cash in your Account up to $500,000 of which $250,000 may be in cash. The SIPC does not protect against the market risks associated with investing. You acknowledge that, for purposes of SIPC, money market balances are considered securities. Securities and other assets held in your Account (except brokered certificates of deposit) are not insured by the Federal Deposit Insurance Corporation (“FDIC”) and are subject to investment risks, including possible loss of the principal amount invested. To obtain information on SIPC, including the SIPC Brochure, go to www.SIPC.org or contact SIPC directly at (202)371-8300.
- Payment for Order Flow Disclosure. Depending on the security traded, equity orders are routed to market centers (i.e., broker-dealers, primary exchanges or electronic communication networks) for execution. Routing decisions are based on a number of factors including the size of the order, the opportunity for price improvement and the quality of order executions, and decisions are regularly reviewed to ensure the duty of best execution is met. DriveWealth may receive compensation or other consideration for the placing of orders with market centers for execution, allowing it to provide customers with lower commission costs. The amount of the compensation depends on the agreement reached with each venue. The source and nature of compensation relating to the undersigned’s transactions will be furnished upon written request.
- Remuneration for Introduction Disclosure. If you as a customer of DriveWealth request a product that DriveWealth does not offer, DriveWealth may introduce you to another broker-dealer or Forex Dealer Member. DriveWealth may receive remuneration for such introduction.
- Arbitration. This Agreement contains a pre-dispute arbitration clause. By signing an arbitration agreement the parties agree as follows:
- All parties to this agreement are giving up the right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed.
- Arbitration awards are generally final and binding; a party’s ability to have a court reverse or modify an arbitration award is very limited.
- The ability of the parties to obtain documents, witness statements and other discovery is generally more limited in arbitration than in court proceedings.
- The arbitrators do not have to explain the reason(s) for their award unless, in an eligible case, a joint request for an explained decision has been submitted by all parties to the panel at least 20 days prior to the first scheduled hearing date.
- The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry.
- The rules of some arbitration forums may impose time limits for bringing a claim in arbitration. In some cases, a claim that is ineligible for arbitration may be brought in court.
- The rules of the arbitration forum in which the claim is filed, and any amendments thereto, shall be incorporated into this agreement.
Subject to the preceding disclosures, you agree that any and all controversies which may arise between you and DriveWealth concerning your Account, any transaction or the construction, performance or breach of this or any other agreement between you and DriveWealth, whether entered into prior, on or subsequent to the date hereof, shall be determined by arbitration. Any arbitration under this Agreement shall be determined before FINRA Dispute Resolution, Inc. (“FINRA DR”) or an exchange of which DriveWealth is a member in accordance with the rules of that particular regulatory agency then in effect. You may elect in the first instance whether arbitration shall be by FINRA DR or a specific national securities exchange of which DriveWealth is a member, but if you fail to make such election by registered letter or telegram to DriveWealth at its main office within five days after you receive a written request from DriveWealth that you make such election, then DriveWealth shall make the election as to the arbitration forum which will have jurisdiction over the dispute. Judgment upon arbitration awards may be entered in any court, state or federal, having jurisdiction. No person shall bring a putative or certified class action to arbitration, not seek to enforce any pre-dispute arbitration agreement against any person who has initiated in court a putative class action; or who is a member of a putative class who has not opted out of the class with respect to any claims encompassed by the putative class action until: (i) the class certification is denied; or (ii) the class is decertified; or (iii) the customer is excluded from the class by the court. Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this agreement except to the extent stated herein.
Interest Period. Monthly interest is computed from the first calendar day through the last calendar day of each month. Interest will be processed to your account on the last business day of each month with the accrual through to the last calendar day the month. Interest is computed for each period on the basis of a 360-day year. Debit Balances. Interest is computed based on the actual net average daily debit balance in your Margin Account Type each day during the period. Interest will be charged on any credit extended to or maintained for you for the purpose of purchasing, carrying or trading in securities or otherwise. Short sales accounts are excluded from the computation of such interest and instead are marked to the market (i.e., the balance in the short sale type is adjusted to equal the market value of the short securities); any excess of the funds or deficiency of funds created by such mark-to-market is credited or charged to your Margin Account Type. Where applicable, free credit balances in other account types will be applied in determining the daily debit balance. Interest Rate on Debit Balances. If you and DriveWealth have agreed upon the interest rate that DriveWealth will charge you in connection with debit balances in your account(s), then that rate will be applied in connection with any credit extended for the purpose of purchasing, carrying, or trading in any security or other property. That agreed-upon interest rate will be tied to a publicly available benchmark rate. As such, the rate applied to your account(s) will change as the benchmark rate changes. If you have not agreed on a rate then the rate of interest to be charged to you in connection with debit balances in your account(s) is as follows. Interest will be charged on any credit extended for the purpose of purchasing, carrying, or trading in any security or other property. The annual rate of interest to be charged is based on the daily Effective Federal Funds Rate (EFFR). The EFFR is published on the Federal Reserve Bank of New York website (www.newyorkfed.org), and is available to you upon your written request. The interest rate will change without prior notice as the quoted daily Effective Federal Funds rate changes. Interest is computed for the actual number of days that a debit balance exists on the basis of a 360-day year. Your annual rate of interest will be no more than 6% above the EFFR and will appear on your monthly statements. Since the rate of interest charged is related to the EFFR, any changes in these rates will cause corresponding changes in the rate charged to your account and these changes will be made without prior notice to you. If for any other reasons DriveWealth changes the base rate of interest it charges, you will be given at least 30 days prior notice. Debit balances in your account represent money lent to you by DriveWealth and it is the amount lent to you by DriveWealth upon which DriveWealth charges you interest. Each additional purchase of securities on credit increases your debit balance, as do interest expenses and any other charges assessed against your account. Interest may be charged to your account at varying times during the month to reflect any changes in interest rates which have occurred during the month. Any interest charged on your debit balance which is unpaid at the close of an interest period will be added to the opening balance for the next interest period. Interest Computation. Interest will be computed taking the actual daily settlement date debit balance and the daily applied interest rate for the calendar month. Your monthly statement will show the opening and closing balances. The interest charge during the interest period will reflect the average debit balance and the applied interest rate for the statement month. The daily debit balance is the aggregate daily settlement date balance for all account types other than the short type. Marking to Market The credit balance in the Short Type will be decreased or increased in accordance with the corresponding market values of all settled short positions. Any associated corresponding debits or credits including settled Cash Account balances will be aggregated as one value and posted to the Margin Type. Credits in your Short Type, other than Marking to Market, will not be utilized to offset your Margin Account balance for interest computation You have agreed in your Customer Agreement to maintain at all times margin for your accounts as required by DriveWealth from time to time. DriveWealth’s general policy is to require the deposit in cash or collateral on initial transactions as prescribed under Regulation T of the Board of Governors of the Federal Reserve System. DriveWealth will also require the deposit of cash or additional eligible collateral at such times as may be necessary to prevent the equity in your Account from dropping below levels determined by DriveWealth, which may exceed those required by applicable regulations. DriveWealth may in any individual case make exceptions to its general policy by requiring more or less cash or collateral at such times as under the circumstances appear necessary or appropriate to DriveWealth. DriveWealth’s determination of the eligibility of collateral and the valuation thereof shall be conclusive.
MARGIN DISCLOSURE STATEMENT
The following information is to notify you of some basic facts about purchasing securities on margin and to alert you to the risks involved with trading securities in a margin account. Before trading in a margin account, you should carefully review your Customer Agreement. If you have any questions, please contact us at support@DriveWealth.com.
When you buy stock on margin, you pay part of the cost, subject to a minimum percentage, and DriveWealth loans the balance to you. In most cases, the minimum percentage that you must pay for securities purchased is the rate established by the Board of Governors of the Federal Reserve System; the current rate is 50% of the cost of the transaction. For example, if you purchase stock on margin that costs $10,000, you would be required to pay $5,000. The unpaid balance of $5,000 would appear as a debit in your account and would be subject to a monthly interest charge (see Truth-in-Lending Statement). The securities purchased are the firm’s collateral for the loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and as a result, DriveWealth can take action, such as issuing a margin call or selling securities in your account, in order to maintain the required equity in the account.
Risks of Borrowing on Margin
It is important that the risks involved in trading securities on margin are fully understood. Because it involves an extension of credit, it may not be appropriate for all investment objectives.
- You can lose more funds than you deposit in a margin account. A decline in the value of securities that are purchased on margin may require you to provide additional funds to avoid the forced sale of those securities or other securities in your account.
- DriveWealth can force the sale of securities or other assets in your account(s). DriveWealth can sell the securities in any of your accounts to cover a margin deficiency when the equity in your account falls below the margin maintenance requirements. The Federal Reserve Board establishes initial margin requirements and the FINRA establishes the maintenance requirements; higher house maintenance requirements also may be established by DriveWealth. You will also be responsible for any shortfall in the account after the sale.
- DriveWealth can sell the securities in your account(s) without notice. Some investors mistakenly believe that a firm must contact them for a margin call to be valid and that the firm cannot liquidate securities in their accounts to meet the call unless the firm has contacted them first. Most firms will attempt to notify their customers of margin calls, but they are not required to do so. However, even if a firm has contacted a customer and provided a specific date by which the customer can meet a margin call, the firm can still take necessary steps to protect its financial interests, including immediately selling the securities without notice to the customer.
- DriveWealth chooses which securities in your account(s) are liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, DriveWealth has the right to decide which security to sell in order to protect its interests.
- DriveWealth can increase its house maintenance margin requirements at any time and is not required to provide you with advance written notice. These changes in firm policy often take effect immediately and may result in the issuance of maintenance margin call. Your failure to satisfy the call may cause DriveWealth to liquidate or sell securities in your account(s).
- You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to customers under certain conditions, a customer does not have a right to the extension.
- Proxy Voting Loss. DriveWealth may lend your shares in a margin account to other customers or broker-dealers. When shares are lent, and remain outstanding over a voting record date period declared by the issuer, you may lose your voting rights on all or a portion of your shares you hold at DriveWealth and will not be eligible to vote those shares.
Day-Trading Risk Disclosure Statement
You should consider the following points before engaging in a day-trading strategy. For purposes of this notice, a “day-trading strategy” means an overall trading strategy characterized by the regular transmission by a customer of intra-day orders to effect both purchase and sale transactions in the same security or securities. Day trading can be extremely risky. Day trading generally is not appropriate for someone of limited resources and limited investment or trading experience and low risk tolerance. You should be prepared to lose all of the funds that you use for day trading. In particular, you should not fund day-trading activities with retirement savings, student loans, second mortgages, emergency funds, funds set aside for purposes such as education or home ownership, or funds required to meet your living expenses. Further, certain evidence indicates that an investment of less than $50,000 will significantly impair the ability of a day trader to make a profit. Of course, an investment of $50,000 or more will in no way guarantee success. Be cautious of claims of large profits from day trading. You should be wary of advertisements or other statements that emphasize the potential for large profits in day trading. Day trading can also lead to large and immediate financial losses. Day trading requires knowledge of securities markets. Day trading requires in-depth knowledge of the securities markets and trading techniques and strategies. In attempting to profit through day trading, you must compete with professional, licensed traders employed by securities firms. You should have appropriate experience before engaging in day trading. Day trading requires knowledge of a firm’s operations. You should be familiar with a securities firm’s business practices, including the operation of the firm’s order execution systems and procedures. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a stock suddenly drops, or if trading is halted due to recent news events or unusual trading activity. The more volatile a stock is, the greater the likelihood that problems may be encountered in executing a transaction. In addition to normal market risks, you may experience losses due to system failures. Day trading will generate substantial commissions, even if the per trade cost is low. Day trading involves aggressive trading, and generally you will pay commissions on each trade. The total daily commissions that you pay on your trades will add to your losses or significantly reduce your earnings. For instance, assuming that a trade costs $16 and an average of 29 transactions are conducted per day, an investor would need to generate an annual profit of $111,360 just to cover commission expenses. Day trading on margin or short selling may result in losses beyond your initial investment. When you day trade with funds borrowed from a firm or someone else, you can lose more than the funds you originally placed at risk. A decline in the value of the securities that are purchased may require you to provide additional funds to the firm to avoid the forced sale of those securities or other securities in your account. Short selling as part of your day-trading strategy also may lead to extraordinary losses, because you may have to purchase a stock at a very high price in order to cover a short position. Potential Registration Requirements. Persons providing investment advice for others or managing securities accounts for others may need to register as either an “Investment Adviser” under the Investment Advisers Act of 1940 or as a “Broker” or “Dealer” under the Securities Exchange Act of 1934. Such activities may also trigger state registration requirements.
PLEASE RETAIN A DUPLICATE COPY OF THIS ENTIRE AGREEMENT FOR YOUR RECORDS.