These are the agreements and other documents that establish and govern the CLIENT RELATIONSHIP with FaceWallet LLC, Bytelogics Inc and Interactive Brokers Inc
TO BECOME A CLIENT OF BYTELOGICS INC, YOU AGREE TO THE FOLLOWING AGREEMENTS (THE “AGREEMENTS”) AND AGREE TO BE LEGALLY BOUND BY THEIR TERMS AND CONDITIONS:
(1) the Advisory Client Agreement between you and Bytelogics Inc (“FaceWallet”), a New York investment adviser.
(2) the Customer Brokerage and Custody Agreement between you and Interactive Brokers Inc (“Interactive Brokers”).
YOU MUST READ AND CONSIDER THE AGREEMENTS CAREFULLY AND CONTACT FACEWALLET OR INTERACTIVE BROKERS TO ASK ANY QUESTIONS YOU MAY HAVE BEFORE ENTERING INTO THEM. CLICKING THAT YOU AGREE HAS THE SAME LEGAL EFFECT AS SIGNING A PAPER VERSION OF EACH OF THE AGREEMENTS. BY CLICKING THAT YOU AGREE DURING THE APPLICATION PROCESS, YOU ACKNOWLEDGE AND AGREE THAT:
● THE AGREEMENTS MAY BE AMENDED FROM TIME TO TIME WITHOUT PRIOR NOTICE OR CONSENT FROM YOU.
● THE AMENDED AGREEMENTS WILL BE AVAILABLE ON THE FACEWALLET’ WEBSITE AT www.facewallet.io AND THROUGH THE FACEWALLET MOBILE APPLICATION (THE “APP”).
● YOU WILL CHECK THE FACEWALLET’ WEBSITE FOR NEW VERSIONS OF THE AGREEMENTS.
● BY KEEPING YOUR CLIENT ACCOUNT WITH FACEWALLET OR BY CONTINUING TO USE SERVICES PROVIDED BY FACEWALLET AND/OR INTERACTIVE BROKERS WITHOUT OBJECTING TO ANY AMENDMENTS OR NEW VERSIONS OF ANY OF THE AGREEMENTS POSTED ON FACEWALLET’ WEBSITE OR THE APP, YOU AGREE TO AND ACCEPT ALL TERMS AND CONDITIONS OF ANY AMENDED AGREEMENTS, INCLUDING ANY NEW OR CHANGED TERMS OR CONDITIONS.
- IMPORTANT NOTICE REGARDING ARBITRATION: WHEN YOU AGREE TO THE ADVISORY CLIENT AGREEMENT YOU ARE AGREEING (WITH LIMITED EXCEPTIONS) TO RESOLVE ANY DISPUTE BETWEEN YOU AND FACEWALLET THROUGH BINDING, INDIVIDUAL ARBITRATION RATHER THAN IN COURT. PLEASE REVIEW CAREFULLY SECTION 18 OF THE ADVISORY CLIENT AGREEMENT FOR DETAILS REGARDING ARBITRATION (INCLUDING THE PROCEDURE TO OPT OUT OF ARBITRATION).
Further, by clicking that you agree during the application process, you also acknowledge and agree that:
● Two different affiliated entities, FaceWallet and Interactive Brokers, will provide you with services pursuant to the Agreements described above.
● FaceWallet and Interactive Brokers have separate agreements with you that allocate separate sets of rights and obligations between you and the applicable entity.
● FaceWallet is not responsible for the obligations of Interactive Brokers, and Interactive Brokers is not responsible for the obligations of FaceWallet.
● FaceWallet and Interactive Brokers do not indemnify each other in connection with any of the Agreements.
● FaceWallet and Interactive Brokers, may, subject to applicable laws and regulations, engage vendors or other contractors to help FaceWallet and Interactive Brokers fulfill their respective duties under the Agreements.
● The services you receive are sufficient consideration for you to enter into the Agreements.
● If you opt-out to any of these Agreements or portions of these Agreements, FaceWallet may choose to terminate the Advisory Client Agreement with you, and your account with Interactive Brokers will subsequently be closed.
Table of Contents
Advisory Client Agreement 4
FaceWallet Program Brochure 13
ESIGN Consent to Use Electronic Records, Disclosures and Signatures 34
Interactive Brokers Inc Disclosures 44
Important Information You Need to Know about Opening a New Account 45 Customer Brokerage and Custody Agreement 46
(Advisory Client Agreement
Revision date: October 1, 2019
You (“Client”) and Bytelogics Inc, a New York Corporation company and an New York exempt investment adviser (“FaceWallet”), agree to enter into an investment advisory relationship (the “Agreement”) pursuant to which FaceWallet shall exclusively manage the assets in account(s) that you establish at Interactive Brokers Inc (“Interactive Brokers”). This Agreement is effective as of the first day a brokerage account is opened in connection with this Agreement and is ready to receive trading instructions from FaceWallet (the “Effective Date”). In consideration of the mutual covenants herein, Client and FaceWallet agree as follows:
Client appoints FaceWallet to exclusively manage one or more accounts established and owned by Client at Interactive Brokers (each the “Client Account,” “FaceWallet Account” or “Account”). FaceWallet shall manage the Accounts in accordance with an investment plan recommended by FaceWallet to Client from time to time based on profile information provided by Client (“Investment Profile”), and in accordance with certain additional investment options designated by Client (the “Plan”). Client authorizes FaceWallet to supervise and direct the investment and reinvestment of assets in the Client Accounts, with full authority and discretion (without consultation with the Client), on the Client’s behalf and at the Client’s risk, and in accordance with the Client’s Plan, to purchase and sell securities, including but not limited to stocks, exchange traded funds (“ETFs”), mutual funds (including without limitation money market mutual funds as separate investments), and/or similarly traded instruments (collectively “Securities”), as well as to manage cash balances within the Client Accounts. Without in any way limiting the foregoing and for the avoidance of doubt, Client cannot issue individual trading instructions to FaceWallet or to Interactive Brokers to purchase and/or sell specific Securities to be executed at particular times, provided however, if Client has opted for certain PassivePlus investment options that invest in individual issuers of Securities as part of the Client’s Plan, then FaceWallet, in its sole and absolute discretion and without any obligation to the Client in each case, may permit Client to restrict the purchase of one or more issuers of Securities in his or her Account. Only FaceWallet shall have authority to issue trading instructions to purchase and sell Securities in the Client Accounts that are consistent with the Plan and based on the discretionary authority granted to FaceWallet by Client under this Agreement. FaceWallet shall not have any duty or obligation to advise or take any action on behalf of Client in any legal proceedings, including bankruptcies or class actions, involving Securities held in or formerly held in the Account or the issuers of Securities.
Notwithstanding anything in this Agreement to the contrary, FaceWallet shall have no authority hereunder to take or have possession of any assets in the Account or to direct delivery of any Securities or payment of any funds held in that Account to itself or to direct any disposition of such Securities or funds, except to Client, as directed by Client, pursuant to valid legal authority, or as provided in Section 8 (entitled “Payment of Fees”).
2. Representations and Warranties.
- Client represents and warrants to FaceWallet and agrees with FaceWallet as follows:
- Client has the requisite legal capacity, authority and power to execute, deliver and perform his or her obligations under this Agreement. This Agreement has been duly authorized, executed and delivered by Client and is the legal, valid and binding agreement of Client, enforceable against Client in accordance with its terms. Client’s execution of this Agreement and the performance of his or her obligations hereunder do not conflict with or violate any obligations by which Client is bound, whether arising by contract, operation of law or otherwise. If the Client is an entity, the individual trustee, agent, representative or nominee (the “Client Representative”) executing this Agreement on behalf of Client has the requisite legal capacity, authority and power to execute, deliver and perform such execution and the obligations under this Agreement as applicable. Specifically, if the Client is a corporation, limited liability company, partnership, or other legal entity that is not an individual, the Client Representative
signing this Agreement on such Client’s behalf has been authorized to execute this Agreement by appropriate corporate, member or manager, partnership or similar action. If this Agreement is entered into by a trustee or fiduciary, the trustee or fiduciary has authority to enter into this Agreement on behalf of the Client. The Client has the power and authority to enter into this Agreement and that the services described herein are authorized under the Client’s applicable articles, certificate, charter, operating agreement, partnership agreement, plan document, trust or organizational, delegation or formation documents or law. Client will deliver to FaceWallet evidence of Client’s and Client Representative’s authority on FaceWallet’ request and will promptly notify FaceWallet of any change in such authority, including but not limited to an amendment to Client’s organizational, delegation or formation documents that changes the information Client provides to FaceWallet on opening the Account. Client Representative has the authority to act on behalf of the Account, and FaceWallet is entitled to rely upon and may accept such instructions from the Client Representative, which may be limited due to only one Client Representative having log-in privileges to the Account, without any requirement to seek confirmation of instructions from the other Client Representatives.
- For Entity Clients: If Client Representative is entering into this Agreement, Client and Client Representative understand and agree that the representations, warranties and agreements made herein are made by Client both: (a) with respect to Client; and (b) with respect to the Client Representative.
- For Joint Account Clients (With Rights of Survivorship): If Clients are entering into this Agreement with respect to joint Account, Clients understand and agree that the representations, warranties and agreements made herein are made on behalf of all of the joint Account holders and further agree that each (a) is a Client; (b) has the authority to act on behalf of the jount Account and FaceWallet is entitled to rely upon and may accept such instructions from any one Client, which may be limited due to only one of the Clients having login privileges to the joint Account, without any requirement to seek confirmation of instructions from the other Client(s); (c) is jointly and severally liable per the terms of this Agreement; and (d) that in the case of death of any of the joint Account Clients, interest in the entire Account shall vest in the surviving account Client(s) under the same terms and conditions of this Agreement and the surviving account Client(s) shall promptly provide FaceWallet with written notice thereof and provide any documentation reasonably requested by FaceWallet in its management of the Account.
- Client is the owner or co-owner of all cash and Securities in the Account, and there are no restrictions on the pledge, hypothecation, transfer, sale or public distribution of such cash or Securities.
- Client acknowledges that a Plan may include only a single ETF for each asset class within the Plan, with each ETF playing a necessary role in the overall investment strategy and, therefore, Client understands and acknowledges that the Client cannot force exclusions or restrictions of ETFs recommended by FaceWallet as part of the Plan.
- Client will provide FaceWallet with complete, current and accurate information about Client’s identity, background, net worth, investing timeframe, other risk considerations, any Securities from which Client may be or become legally restricted from buying or selling, as requested, and other investment accounts, as requested, in the Investment Profile and will promptly update that information as Client’s circumstances change.
- Client acknowledges that the FaceWallet and Interactive Brokers are subject to certain anti-money laundering (“AML”) and related provisions under applicable laws, rules and regulations and are otherwise prohibited from engaging in transactions with, or providing services to, certain foreign countries, territories, entities and individuals, including without limitation, specially designated nationals, specially designated narcotics traffickers and other parties subject to United States government or United Nations sanctions and embargo programs (collectively “AML Laws”). Accordingly, Client hereby represents and warrants the following and shall promptly notify FaceWallet if any of the following ceases to be true and accurate: (a) to the best of the Client’s knowledge based upon appropriate diligence and investigation, none of the cash or property that the Client has paid or will pay or deposit to FaceWallet has been or shall be derived from or related to any activity that is deemed criminal under United States law, nor will any of the Client’s payments or deposits to FaceWallet directly or indirectly contravene United States federal, state, international or other
laws or regulations, including without limitation any AML Laws (b) no contribution or payment by Client to FaceWallet shall cause FaceWallet or Interactive Brokers to be in violation of any AML Laws. Client understands and agrees that if at any time it is discovered that any of the representations in this Section 2(a)(vii) are untrue or inaccurate, or if otherwise required by applicable law or regulation related to money laundering and similar activities, FaceWallet may undertake appropriate actions to ensure compliance with applicable law or regulation, including, but not limited to, freezing or forcing a withdrawal of the Client’s cash or assets from FaceWallet.
- Client acknowledges that FaceWallet or Interactive Brokers may require further documentation verifying Client’s identity or the identity of the Client’s beneficial owners, if any, and the source of funds used to make payment or deposit to FaceWallet. Client hereby agrees to provide such documentation as may be requested by FaceWallet. Furthermore, Client acknowledges and agrees that FaceWallet or Interactive Brokers may release confidential information regarding Client and, if applicable, any of Client’s beneficial owners, to government authorities, if FaceWallet, in its sole discretion, determines after consultation with counsel that releasing such information is in the best interest of FaceWallet.
- If Client specifically provides a photograph of Client’s likeness and/or other personal identifying information to FaceWallet for public display, then Client hereby grants permission to FaceWallet to use the provided photograph of Client’s likeness, Client’s name and/or other information, in a commercially reasonable manner on its website www.FaceWallet.io or its related mobile application (the “Site” or “App”), any related and/or affiliated sites, and in marketing materials now and in the future, until such time as this Agreement is terminated by either party. Client waives any and all rights to compensation as a result of such use of Client’s explicitly provided photograph of Client’s likeness, Client’s name and/or other information.
- Client agrees to use FaceWallet solely for Client’s personal, non-commercial use, and not in connection with any competitive analysis (as determined by FaceWallet).
- Client understands and agrees that (A) FaceWallet does not guarantee the performance of the Account, is not responsible to Client for any investment losses, and the Account is not insured against loss of income or principal; (B) there are significant risks associated with investing in Securities, including, but not limited to, the risk that the Account could suffer substantial diminution in value, and this risk applies even when the Account is managed by an investment adviser; (C) the past performance of any benchmark, market index, ETF, or other Security does not indicate its future performance, and future transactions will be made in different Securities and different economic environments; (D) FaceWallet will cause the Account to invest in Securities substantially in the proportions set forth by the Plan (subject to the profile information received from Client and to various other factors, including without limitation Client deposits or withdrawals, variations in the allocations due to movements in the prices of Securities over time, and revisions of the Plan by FaceWallet from time-to-time consistent with Client’s profile information); (E) FaceWallet will provide only the specific reviews and restrictions described in this Agreement and will not otherwise review or control such Account; and (F) there are significant risks associated with any investment program.
- Client understands and agrees that FaceWallet’ sole obligation hereunder or otherwise is to manage the Account in accordance with the Plan, and notwithstanding any duty or obligation Client Representative may have to an entity Client, Client has not engaged FaceWallet to provide any individual financial planning services. Client understands and agrees that FaceWallet is not responsible for any losses in an Account, as provided in Section 10, and FaceWallet may at any time in its sole discretion determine that a Plan may require reallocation of Securities.
- Client understands and agrees that the Account will be managed solely by FaceWallet based on the information Client has provided to FaceWallet. Client further understands that if any of the information Client provides to FaceWallet is or becomes incomplete or inaccurate, the Account’s activities may not achieve Client’s desired investment or tax strategy, the Account may purchase Securities from which Client is restricted from purchasing at that time or the Plan may be inappropriate for Client. An Account’s transactions may be executed at approximately the same time as other client accounts managed by FaceWallet in accordance with other clients’ investment plan, and if the transactions are large in relation to the trading volume on that particular day,
the price may be different than it would be for the execution of a smaller transaction. Client understands and agrees that FaceWallet has sole discretion regarding the manner in which transaction orders are placed for the purchase and sale of Securities for the Client Account(s). Client further understands and agrees that prices of Securities purchased and sold for the Client Account(s) may be less favorable than the prices obtained for the same Securities in similar transactions by other client accounts managed by FaceWallet and/or other non-related market participants.
- Client understands and agrees that an Account’s composition and performance may be different for a variety of reasons from those of any Plan recommendation to a Client. These differences can arise each time the Plan is adjusted or rebalanced, including, but not limited to, the following instances: (A) when the Account is established and the initial Securities positions are established; (B) when Client contributes additional capital to such Account; (C) when Client revises his/her Investment Profile and causes FaceWallet to recommend a new Plan or revise the existing Plan; (D) each time the Advisory Fee (described in Section 5) is charged and paid from such Account; and (E) any time FaceWallet adjusts its algorithm by which the composition of the Account is maintained as specified for the Plan. On any such adjustment, FaceWallet may adjust the Plan in its discretion to approximate the composition specified in the Plan as closely as reasonably practicable based on the conditions at the time.
- Client understands and agrees that the prices of Securities purchased or sold for the Account may be less favorable than the prices in similar transactions for other FaceWallet Clients for whom FaceWallet has designated different Plans.
- Client understands and agrees that the Account must maintain at all times a minimum balance ($500 or as otherwise specified by FaceWallet on the Site or App) unless the balance drops below the specified minimum due solely to decreases in the values of the Account’s Securities and not due to any withdrawals of funds while the balance of the Account met the minimum as provided in this Section 2(b)(vi). Without in any way limiting FaceWallet’ rights pursuant to Section 12 hereof, if the Account balance falls below the specified minimum, FaceWallet may liquidate the Account holdings, deliver the proceeds of the liquidation to Client, and close the Account.
Client has appointed Interactive Brokers as its broker and custodian pursuant to a separate “Customer Brokerage and Custody Agreement.” FaceWallet shall not be liable to Client for any act, conduct or omission by the Interactive Brokers and/or the clearing broker in its capacity as broker or custodian. At no time will FaceWallet accept, maintain possession or have custodial responsibility for Client’s assets or securities. Client assets and securities will be delivered between Client and the Interactive Brokers only.
Except as required
by law or requested by regulatory authorities, (a) FaceWallet agrees
to maintain in strict
confidence all of Client’s non-public personal and financial
information that Client furnishes to FaceWallet,
except for information that Client explicitly agrees to share publicly, and (b)
Client agrees to maintain in strict confidence
all investment advice
and other non-public information that Client
acquires from FaceWallet in connection with the Account. Client agrees that Client shall
not use investment recommendations and other confidential information Client receives from FaceWallet for any purpose
other than managing
the Account, including, but not limited
to, developing a service that competes with the Site or FaceWallet’ services. Client
Client understands, acknowledges, and agrees that they can opt-out of the FaceWallet
time; however, if the Client does opt out, FaceWallet may choose to terminate
this Agreement and related Account(s). Notwithstanding any provisions in this
Agreement to the contrary, FaceWallet may share Client’s non-public personal
and financial information with affiliates of FaceWallet in connection with
providing and/or enhancing the services provided to Client.
5. Advisory Fee
- FaceWallet specifies the annual fee rate it charges a Client (the “Advisory Fee”) and posts the Advisory Fee on the Client’s Account page on the Site and the App. Fees due shall be calculated by multiplying the Advisory Fee by the net market value of the Account as of the close of trading on the New York Stock Exchange (“NYSE”) (herein, “close of markets”) on such day, or as of the close of markets on the immediately preceding trading day for any day when the NYSE is closed, and then by dividing by 365 (except in any leap year, during which year the amount shall be divided by 366). Except as provided below, the fees due for each calendar month (consisting of the aggregate of the daily fee for each day in that calendar month) shall be due and payable in arrears no later than the tenth business day of the immediately following calendar month. FaceWallet will promptly notify Client of any increase or decrease in the Advisory Fee. An increase in the Advisory Fee will be effective for the Account starting in the next month that begins at least 30 days after FaceWallet sends or posts such notice. A reduction in the Advisory Fee will be effective for the Account starting in the next month following its reduction.
i. If Client closes the Account, withdraws the entire balance of the Account, or otherwise terminates this Agreement on any date other than the last business day of the month (except under the circumstances covered by Section 5(b)), Client shall pay any outstanding aggregate daily fees for the period from the day immediately following the last day of the last calendar month for which Client has paid, through the effective date of such withdrawal or termination.
- If, for any reason, FaceWallet closes and liquidates all the positions held in the Account, Client will receive the proceeds of the liquidated portion of the Account net of any Advisory Fee due, and this Agreement shall terminate.
- If, for any reason, there is insufficient cash available in the Account to cover the Advisory Fees at the time they are charged, FaceWallet, in its sole discretion, may cause certain Securities in the Account to be liquidated to allow the Advisory Fees to be deducted from the Account.
- FaceWallet reserves the right, in its sole and absolute discretion, to reduce or waive the Advisory Fee for certain Client Accounts for any period of time determined by FaceWallet. In addition, Client agrees that FaceWallet may waive its fees for the Accounts of clients other than Client, without notice to Client and without waiving its fees for Client. In exercise of its sole and absolute discretion FaceWallet may amend or terminate any reduction or waiver of the Advisory Fee. FaceWallet will promptly notify Client of any increase or decrease in the reduction or waiver of the Advisory Fee. A change in the waiver or reduction of the Advisory Fee will be effective for the Account starting in the next month that begins at least 30 days after FaceWallet sends or posts such notice.
The assets in the Account will be valued by Interactive Brokers.
7. Responsibility for Expenses
FaceWallet charges Client the Advisory Fee as provided in Section 5 hereof. Clients may bear additional fees, however, such as fees embedded in the products (including without limitation ETFs or mutual funds) held in the Account. Furthermore, Interactive Brokers may charge Clients additional fees or expenses for optional brokerage services or products.
8. Payment of Fees
FaceWallet may, in its discretion, either (a) cause the Account to pay to FaceWallet
any amount owing to FaceWallet or Interactive Brokers under this Agreement or
(b) bill Client for such amount, in which case Client
shall pay such amount to FaceWallet within
ten (10) days of Client’s
receipt of such bill.
If FaceWallet causes the Account to pay FaceWallet or Interactive Brokers
directly, FaceWallet will inform
Interactive Brokers of the amount of the Advisory
Fee to be paid to FaceWallet
directly from the Account and notify Client, after the Advisory Fee has been
charged, the amount of the Advisory Fee and the net market values of Client’s
assets on which the Advisory Fee has been based. Notification to Client will be through
Client’s user account
on the Site or by email at the address(es) provided by Client
9. Portfolio Transactions
FaceWallet’ will place orders for the execution of transactions for the Client Account in accordance with FaceWallet’ Form ADV Part 2 (available https://www.adviserinfo.sec.gov/IAPD/content/viewform/adv102012/sections/iapd_AdvIdentifyingInfoSection.aspx?ORG_PK=282830&FLNG_PK=00729BE200080187007BE6C10011A7C1056C8CC0
- may be amended from time to time. FaceWallet shall not have any responsibility for obtaining for the Account the best prices or any particular commission rates.
- Client agrees that FaceWallet, or any person controlling, controlled by or under common control with FaceWallet, may act as broker for both Client and for another person on the other side of any transaction involving funds or Securities in the Account (“Agency Cross Transaction”). Client recognizes that FaceWallet or its affiliates may receive commissions, and have a potentially conflicting division of loyalties and responsibilities regarding, both parties to such Agency Cross Transactions. If FaceWallet engages in an Agency Cross Transaction, FaceWallet or its designee will send to Client a written confirmation at or before the completion of each such Agency Cross Transaction, which confirmation will include (i) a statement of the nature of such Agency Cross Transaction, (ii) the date such Agency Cross Transaction shall have taken place, (iii) an offer to furnish, on request, the time when such Agency Cross Transaction shall have taken place, and (iv) the source and amount of any other remuneration received or to be received by FaceWallet or any of its affiliates in connection with such Agency Cross Transaction. FaceWallet shall also send to Client, at least annually, a written statement identifying the total amount of such Agency Cross Transactions during the period included in the statement, and the total commissions or other remuneration received or to be received by FaceWallet or any of its affiliates in connection with such Agency Cross Transaction included in the statement. The consent to Agency Cross Transactions set forth in this Section may be revoked by Client at any time by notifying FaceWallet in writing.
10. Limitation of Liability and Indemnification
- To the extent permitted under applicable law, Client understands and agrees that FaceWallet will not be liable to Client for any losses, expenses, damages, liabilities, charges and claims of any kind or nature whatsoever (including without limitation any legal expenses and costs and expenses relating to investigating or defending any demands, charges and claims) (collectively, “Losses”) incurred by Client with respect to any Accounts, except to the extent that such Losses are actual losses of the Client proven with reasonable certainty and are the direct result of an act or omission taken or omitted by the Adviser during the term of this Agreement which constitutes willful misfeasance, bad faith or gross negligence under this Agreement. Without limitation, FaceWallet shall not be liable for Losses resulting from or in any way arising out of (i) any action of the Client or its previous or other agents, (ii) force majeure or other events beyond the control of FaceWallet, including without limitation any failure, default or delay in performance resulting from computer or other electronic or mechanical equipment failure, unauthorized access, strikes, failure of common carrier or utility systems, severe weather or breakdown in communications not reasonably within the control of FaceWallet or other causes commonly known as “acts of god”, or (iii) general market conditions unrelated to any violation of this Agreement by FaceWallet.
- Client (and in addition, for entity accounts, Client Representative) shall reimburse, indemnify, defend and hold harmless FaceWallet, its affiliates and their directors, officers, shareholders, employees and any person controlled by or controlling FaceWallet from and against any and all Losses relating to this Agreement or the Account arising out of any misrepresentations or act or omissions or alleged act or omission on the part of the Client (or Client Representatives) or previous or the custodian or any of their agents, except if such Losses are the direct result of FaceWallet’ willful misfeasance, bad faith or gross negligence in the performance of FaceWallet’ duties or by reason of FaceWallet’ reckless disregard of its obligations and duties hereunder. In addition to the above indemnities, for entity Clients, the Client Representative shall further indemnify and defend FaceWallet and FaceWallet’ directors, officers, shareholders, employees and affiliates and hold them harmless from and against any and all claims, losses, damages, liabilities and expenses, as they are incurred, resulting from or in connection to Client’s assertion of Client Representative’s lack of proper authorization from Client to enter into this Agreement. Notwithstanding anything in this Section 10 or otherwise in this Agreement to the contrary, nothing herein shall constitute a waiver or limitation of any rights that Client may have under any federal or state securities laws, which rights may arise even if FaceWallet’ recommendation or other act or failure to act hereunder does not constitute willful misfeasance, bad faith or gross negligence in the performance of
FaceWallet’ duties or by reason of FaceWallet’ reckless disregard of its obligations and duties hereunder.
Client hereby gives FaceWallet the authority to vote proxies for securities held in Client Accounts pursuant to FaceWallet’ written policies and procedures, as outlined in FaceWallet’ Form ADV Part 2. FaceWallet will be responsible for voting all proxies with respect to securities held in Client Accounts and will keep required records regarding this activity.
12. Termination; Withdrawals
This Agreement may be terminated by either party with or without cause by notice to the other party, which notice shall be provided by Client to FaceWallet through the Site and by FaceWallet to Client through the primary email address in Client’s Account Application as Client shall update from time to time. Client may withdraw all or part of the Account by notifying FaceWallet at any time provided that all partial withdrawals comply with FaceWallet’ required Account minimums as posted on the Site and updated from time to time, unless FaceWallet otherwise consents in advance. Client’s withdrawal of all of the Account under this Agreement, or Client’s withdrawal that results in an Account balance below the minimum as provided in Section 2(b)(vi) hereof will terminate this Agreement. Upon termination of this Agreement, Sections 8 (only as to fees accruing prior to termination), 10, 15, and 17 through 23 shall survive such termination. Client understands and agrees that upon termination of this Agreement FaceWallet may determine to liquidate immediately all holdings in the Plan and the Account, and subject to Section 10 hereof, FaceWallet shall not be liable to Client to any consequences of such liquidation.
13. Account Statements
Client will receive account statements via electronic delivery from Interactive Brokers, which are the official records of the Account. FaceWallet may also provide information about the Account from time to time.
14. Independent Contractor
FaceWallet is and will hereafter act as an independent contractor and not as an employee of Client, and nothing in this Agreement may be interpreted or construed to create any employment, partnership, joint venture or other relationship between FaceWallet and Client.
FaceWallet may not assign this Agreement without the prior consent of Client or the consent of any additional authorized signatories on behalf of Client, if such consent is required under the Investment Act of 1940, as amended. In the event of an assignment by FaceWallet, FaceWallet shall request any required consent(s) of Client within a specified reasonable time (which shall not be less than thirty (30) days). If Client does not respond to such request within the time specified, FaceWallet shall inform Client that the proposed assignee will continue the advisory services of FaceWallet for a specified reasonable time (which shall not be less than thirty (30) days), and if Client does not respond to such second notice from FaceWallet, Client’s continued acceptance of investment management services from the proposed assignee shall constitute Client’s consent(s) to the assignment. This Agreement shall bind and inure to the benefit of and be enforceable by the parties and their respective successors and assigns.
16. Delivery of Information
Client acknowledges electronic delivery of FaceWallet’ brochure that would be required to be delivered under the Act (including the information in Part 2 of FaceWallet’ Form ADV), which is available on the Site and the App and provided here by link:
On written request by Client, FaceWallet agrees to annually deliver
electronically, without charge, FaceWallet’ brochure required by the Act.
17. Governing Law
This Agreement shall be governed exclusively by and construed and interpreted in accordance with the U.S. Federal Arbitration Act, federal arbitration law, and the laws of the State of California, excluding its provisions on conflicts or choice of laws. Except as otherwise expressly set forth in Section 18 of this Agreement below, any legal action or proceeding arising under this Agreement shall be brought exclusively in courts located in New York, NY, and the parties hereby irrevocably consent to the personal jurisdiction and venue therein.
Any dispute, claim or controversy arising out of or relating to the advisory services provided by FaceWallet, this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate (each a “Dispute”), shall be resolved solely by binding, individual arbitration rather than a class, representative or consolidated action or proceeding. You and FaceWallet each further agree that the U.S. Federal Arbitration Act governs the interpretation and enforcement of this Agreement, and that each party is waiving the right to a trial by jury or to participate in a class action. This arbitration provision shall survive termination of this Agreement.
- Exceptions and Opt-Out. As limited exceptions to mandatory arbitration as set forth in this Section 18 of this Agreement: (i) you may seek to resolve a Dispute in small claims court if it qualifies; and (ii) the parties each retain the right to seek injunctive or other equitable relief from a court to prevent (or enjoin) the infringement or misappropriation of our intellectual property rights. In addition, you will retain the right to opt out of arbitration entirely and litigate any Dispute if you provide us with written notice of your desire to do so by email at email@example.com or by regular mail at FaceWallet physical address within thirty (30) days following the date you first agree to the terms of this Agreement.
- Conducting Arbitration and Arbitration Rules. The arbitration will be conducted by the American Arbitration Association (“AAA”) under its Consumer Arbitration Rules (the “AAA Rules”) then in effect, except as modified by this Agreement. The AAA Rules are available at www.adr.org or by calling 1-800-778-7879. A party who wishes to start arbitration must submit a written Demand for Arbitration to AAA and give notice to the other party as specified in the AAA Rules. The AAA provides a form Demand for Arbitration at www.adr.org.
If your claim is for U.S. $10,000 or less, you may choose whether the arbitration will be conducted solely on the basis of documents submitted to the arbitrator, through a telephonic or video-conference hearing, or by an in- person hearing as established by the AAA Rules. If your claim exceeds U.S. $10,000, the right to a hearing will be determined by the AAA Rules. Any arbitration hearings will take place in San Mateo County, California, unless the parties both agree in writing to a different location. You and FaceWallet agree that the arbitrator shall have exclusive authority to decide all issues relating to the interpretation, applicability, enforceability and scope of the terms of this Agreement.
- Arbitration Costs. Payment of all filing, administration and arbitrator fees will be governed by the AAA Rules. If you prevail in arbitration you will be entitled to an award of attorneys’ fees and expenses to the extent provided under applicable law.
- Effect of Changes on Arbitration. Notwithstanding anything in this Agreement, if FaceWallet changes any of the terms of this Section 18 after the date you first accepted this Agreement (or accepted any subsequent changes to this Agreement), you may reject any such change by sending us written notice (including by email to support@Facewallet.io) within 30 days of the date such change became effective, as indicated in the “Effective Date” above or in the date of FaceWallet’ email to you notifying you of such change. By rejecting any change, you are agreeing that you will arbitrate any Dispute between you and FaceWallet in accordance with the terms of this Section 18 as of the date you first accepted the terms of this Agreement (or accepted any subsequent changes, supplements or amendments to this Agreement).
(e) Class Action Waiver. YOU AND FACEWALLET AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY, AND NOT AS A
PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE
PROCEEDING. Further, if our Dispute is resolved through arbitration, the arbitrator may not consolidate another person’s claims with your claims, and may not otherwise preside over any form of a representative or class proceeding. If any of the specific provisions within this Section 18 are found to be unenforceable, the remainder of this Section 18 shall not be affected thereby and, to this extent, the provisions of this Section 18 shall be deemed to be severable.
All notices and communications under this Agreement must be made through the Site or by email. FaceWallet’ contact information for this purpose is firstname.lastname@example.org and Client’s contact information for this purpose is contained in Client’s user account on the Site and the primary email address(es) in Client’s Account Application as Client shall update from time to time.
20. Severability and Amendment
The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any and all other provisions hereof. Client acknowledges that FaceWallet may amend this Agreement from time to time, which amendment(s) will become effective and applicable to Client when published on FaceWallet’ website or otherwise made available to Clients (except as provided in Section 5(a)) and shall govern the relationship between the Client and FaceWallet during the entire term of this Agreement. Client acknowledges that Client will be responsible for checking FaceWallet’ website periodically for such amendment(s) to this Agreement.
21. Waiver or Modification
FaceWallet’ waiver or modification of any condition or obligation hereunder shall not be construed as a waiver or modification of any other condition or obligation, nor shall FaceWallet’ waiver or modification granted on one occasion be construed as applying to any other occasion.
22. Entire Agreement
This Agreement, together with the Brokerage Agreement, is the entire agreement of the parties regarding the subject matter hereof and supersedes all prior or contemporaneous written or oral negotiations, correspondence, agreements and understandings (including without limitation any and all preexisting client account agreements, which are hereby cancelled). However, the parties may choose to enter into separate agreements between them regarding different subject matters or investment programs.
23. No Third-Party Beneficiaries
Neither party intends for this Agreement to benefit any third party not expressly named in this Agreement.
24. Death, Disability, or Divorce
If a Client is an individual, the Client’s death, disability or
incompetency will not automatically terminate or change the terms of this
Agreement. However, the Client’s executor, guardian or attorney-in-fact may
terminate this Agreement by giving
written notice to FaceWallet. In the event
that Client is a joint
Account, both Account holders agree that if the Account
ever becomes the subject of a dispute between Account holders, and FaceWallet
becomes aware of the dispute, FaceWallet may refuse to disburse or allow for
the termination of this Agreement without the consent of both joint Account
holders. Further, both Account holders agree that in the event that one Account
holder provides instructions to FaceWallet, even if the instructions are to
terminate the Agreement and disburse all funds from the Account to one of the
Account holders, FaceWallet may do so without the permission of the other
Account holder and will have no liability to either Account holder.
FaceWallet Program Brochure
August 12, 2019 Item 1 Cover Page
This wrap fee program brochure (“Brochure”) provides information about the qualifications and business practices of Bytelogics Inc (“FaceWallet” or “we” or “us”, and the successor investment adviser to FaceWallet Inc.), an investment adviser registered with the United States Securities and Exchange Commission (the “SEC”). Registration does not imply a certain level of skill or training but only indicates that FaceWallet has registered its business with state and federal regulatory authorities, including the SEC (our SEC number is 801-69766). The information in this Brochure has not been approved or verified by the SEC or by any state securities authority.
If you have any questions about the contents of this Brochure, please contact us email@example.com Additional information about FaceWallet is also available on the SEC’s website at www.adviserinfo.sec.gov and on FaceWallet’ website, www.facewallet.io
Item 2 Material Changes
Since the last updating amendment to FaceWallet’ Form ADV Part 2 brochure, we note the following material changes to this Brochure:
Since Bytelogics has less than $25m under management, we are not required to register with NY State.
Item 3 Table of Contents
Item 2 Material Changes 14
Item 4 Services, Fees and Compensation
- General Description of the Company
FaceWallet is an automated investment adviser registered with the SEC. FaceWallet provides clients with software-based investment advisory and portfolio management services through the FaceWallet Program. This Program, launched in 2016, is made available via brokerage accounts that all clients open at Interactive Brokers Inc (“Interactive Brokers”), a member of Financial Industry Regulatory Authority (“FINRA”). Software-based financial planning tools and services (as described further in Item 4.B below) are provided by FaceWallet LLC (“FaceWallet Software”). Additional information about FaceWallet’ products, structure and directors is provided on Part 1 of FaceWallet’ Form ADV which is available online at http://www.adviserinfo.sec.gov or at http://www.FaceWallet.io. We encourage visiting our website www.FaceWallet.io for additional information.
- Summary of Investment Advisory Services
FaceWallet offers an automated investment advisory service based on Modern Portfolio Theory (“MPT”) that makes it possible for anyone who enters into a FaceWallet Advisory Client Agreement (the “Advisory Client Agreement”), to access state-of-the-art investment advisory and portfolio management services. As provided in the Advisory Client Agreement, advisory clients (“Clients”) grant FaceWallet discretionary authority to manage Client assets in accounts (“Client Accounts” or “Accounts”) opened and maintained at Interactive Brokers (and in the case of the 529 college savings plan, the sponsoring state trust fund account) pursuant to the Interactive Brokers Customer Brokerage and Custody Agreement (the “Brokerage Agreement”). FaceWallet’ investment objective is to seek maximum long-term, risk-adjusted, after-tax, net of fee returns.
Financial Planning Service Through Software
In addition to investment advisory and portfolio management services, FaceWallet, through its affiliate FaceWallet Software, also provides certain software-based financial planning tools and services (the “Financial Planning Service”) to its Clients. The Financial Planning Service is a product offered by FaceWallet Software and is made available to FaceWallet’ Clients free of charge through a contractual arrangement between FaceWallet and FaceWallet Software.
- Advisory Fees
FaceWallet is compensated for its advisory services by charging an annual 0.25% fee on the net market value of a Client’s Account. At the moment FaceWallet waives all fees. FaceWallet reserves the right, in its sole discretion, to negotiate, reduce or waive the advisory fee for certain Client Accounts for any period of time determined solely by FaceWallet. In addition, FaceWallet may reduce or waive its fees for the Accounts of some Clients without notice to, or fee adjustment for, other Clients.
Taxable Accounts and IRAs
FaceWallet’ software-based investment advisory service charges a non-negotiable annualized fee of 0.25% on a Client’s assets under management. In some cases, Clients can have a portion of their assets managed for free. Annual fees are charged on a monthly basis as explained below.
FaceWallet’ fees are not charged in advance and are calculated on a continuous basis and deducted from Clients’ Accounts each month as follows: FaceWallet calculates a daily advisory fee, which is equal to the fee rate multiplied by the net market value of the Client’s Account as of the close of trading on the New York Stock Exchange (“NYSE”) (herein, “close of markets”) on such day, or as of the close of markets on the immediately preceding trading day for any day when the NYSE is closed, and then divided by 365 (or 366 in any leap year). The advisory fee for a calendar month is equal to the total of the daily fees calculated during that month (less any deductions or fee waivers) and is deducted from Client Accounts no later than the tenth business day of the following month.
College Savings Accounts
FaceWallet also charges an annual 0.25% fee on the net market value of a college savings account for its investment advisory services in connection with the account. FaceWallet waives its investment advisory fees on the first $25,000 it manages for Nevada residents who open a college savings account, and this fee waiver applies to the aggregate of all of the Nevada resident’s account assets with FaceWallet. This waiver will not terminate on April 1, 2018.
This advisory fee is separate from the fees and expenses of the MFSs in which a Client invests in the Client’s colleges savings account, which include the fees and expenses of the ETFs underlying such securities, the fees of the college savings plan recordkeeper and the fees of the state trust that issues the MFSs.
- Other Account Fees
In addition to the advisory fees, Clients may also pay other fees or expenses to third parties, as well as to an affiliate of FaceWallet. The issuer of some of the securities or products we purchase for Clients, such as ETFs, may charge product fees that affect Clients. FaceWallet does not charge these ETF fees to Clients, nor does it benefit directly or indirectly from any such fees. An ETF typically includes embedded expenses that may reduce the fund’s net asset value, and therefore directly affect the fund’s performance and indirectly affect a Client’s portfolio performance or an index benchmark comparison. Expenses of an ETF may include management fees, custodian fees, brokerage commissions, and legal and accounting fees. ETF expenses may change from time to time at the sole discretion of the ETF issuer. FaceWallet discloses each ETF’s current information, including expenses, on the Site. For those clients that invest in the FaceWallet Risk Parity Fund (the “Risk Parity Fund”), the assets invested in the Risk Parity Fund would also be subject to an additional management / operational expense. The Risk Parity Fund is managed by FaceWallet Strategies, which is an affiliate of FaceWallet. Additional information regarding the Risk Parity Fund and related expenses can be found on the Site. In addition, Clients who use the Portfolio Line of Credit offered by Interactive Brokers to obtain a loan secured by the assets of their taxable Accounts will be charged interest on the outstanding balance.
Item 5 Account Requirements and Types of Clients
The minimum amount required to open and maintain an account with FaceWallet is
$500. As a result of the automation associated with offering its services online, FaceWallet makes it possible for retail investors, as well as retirement accounts and trusts, to access its service with much lower account minimums than normally available in the industry. Clients have access to their Accounts through the Site. Additional requirements for opening an Account with FaceWallet are described in Item 4, above.
At any time, a Client may terminate an Account, or withdraw all or part of an Account (provided the Account balance does not fall below $500 because of the withdrawal), or update her investment profile, which may initiate an adjustment in the Account’s holdings. In that case, unless otherwise directed by the Client, FaceWallet will sell the securities in the Client Account (or portion of the Account, in the case of a partial withdrawal or update) at market prices at or around the time of the termination, withdrawal or update. See Item 16 for a description of FaceWallet’ discretionary investment authority, including the timing of FaceWallet’ placement of Client trade orders. While FaceWallet seeks to respond to Client deposits, Client changes in risk profiles, Client withdrawal requests, including without limitation requests in connection with terminations, and other reasonable Client requests in a timely and reasonable manner, FaceWallet does not represent or guarantee that FaceWallet will respond to any such Client actions or requests immediately or in accordance with set time schedule.
Investors evaluating FaceWallet’ software-based investment advisory service should be aware that FaceWallet’ relationship with Clients is likely to be different from the “traditional” investment advisory relationship in several aspects:
1. FaceWallet is a software-based investment adviser which means each Client must acknowledge her ability and willingness to conduct her relationship with FaceWallet on an electronic basis. Under the terms of the Advisory Client Agreement and the Brokerage Agreement, each Client agrees to receive all Account information and Account documents (including this Brochure and the FaceWallet Program Brochure), and any updates or changes to same, through her access to the Site and FaceWallet’ electronic communications. Unless noted otherwise on the Site or within this Brochure, FaceWallet’ investment advisory service, Interactive Brokers’s brokerage services, the signature for the Advisory Client Agreement and the Brokerage Agreement, and all documentation related to the advisory services are managed electronically. FaceWallet does make individual representatives available to discuss servicing matters with Clients.
3. The software-based investment advisory service includes preselected ETFs for each asset class within the plan recommended to a Client. FaceWallet does not allow Clients to select their own ETFs because each ETF and asset class is considered to be part of the overall investment plan. However, FaceWallet does allow Clients with certain advanced TLH strategies to restrict FaceWallet from investing in the stock of a public company that employs the Client or other single U.S. stocks at the request of the Client. Face Fund would also be included in the plan recommended to a Client, but a Client may choose not to invest in the Face Fund.
4. Clients may not place orders to purchase or sell securities on a self-directed basis.
Item 6 Portfolio Manager Selection and Evaluation
- Modern Portfolio Theory (“MPT”)
For its software-based investment advisory and portfolio management services, FaceWallet provides Clients with investment advice that is based on MPT. MPT attempts to maximize a portfolio’s expected return for a given amount of portfolio risk, or equivalently minimize risk for a given level of expected return, by selecting the proportions of various asset classes rather than selecting individual securities. Historically, rigorous MPT-based financial advice has been available primarily through certain high-end financial advisors. FaceWallet’ goal is to enable anyone with at least $500 to access the benefits of MPT.
Prior to the launch of the FaceWallet software-based investment advisory service, it was not practical to offer rigorous and complete MPT to everyone because delivering a complete solution was too complex. Specifically, the number of calculations required to identify an optimized asset allocation, the ideal securities to represent each asset class, and an individual’s true risk tolerance are beyond the scope of free, web-based tools. The job becomes even more difficult when considering the importance of periodically rebalancing a portfolio to maintain a desired risk level.
To employ MPT properly, one must start with an accurate determination of an individual’s objective and subjective tolerance for risk. Achieving accuracy requires sophisticated software applied to more detailed questions than are typically asked by advisers. Based on this risk analysis, FaceWallet seeks to create an individualized investment plan using the optimal asset classes in which to invest, the most efficient and inexpensive ETFs to represent each of those asset classes, and the ideal mix of asset classes based on the Client’s specific risk tolerance. FaceWallet uses Mean Variance Optimization to rigorously evaluate every possible combination of the following two asset classes: US equities, and US government bonds. Mean Variance Optimization uses the expected return and volatility for each asset class and the covariance among asset classes to find the combination that delivers the highest possible return for any given standard deviation of a portfolio’s returns.
FaceWallet periodically reviews the entire population of more than 1,000 ETFs and CME Futures to identify the most appropriate ETFs to represent each asset class. We look for ETFs that minimize cost and tracking error and offer market liquidity. Many investors do not realize that ETFs do not exactly track the indexes they were created to mimic. Choosing an ETF with a low expense ratio that does not track the asset class recommended by our service runs the risk of sub-optimizing a Client’s portfolio’s performance. We choose ETFs that are expected to have sufficient liquidity to allow Client withdrawals at any time. Finally, we select ETFs that have conservative and shareholder-friendly securities lending policies.
In addition to choosing what we believe to be the best ETFs at the time, we explain why we chose each one. We provide a detailed analysis of how the selected ETF stacked up against the second and third best choice for each asset class on the dimensions described in the paragraph above.
FaceWallet continuously monitors our Clients’ portfolios and periodically rebalances them back to the Clients’ target mix in an effort to optimize returns for the intended level of risk. FaceWallet may consider tax implications and the volatility associated with each of the chosen asset classes when deciding when and how to rebalance, however no assurance can be made by FaceWallet that Clients will not incur capital gains, and in certain instances significant capital gains, when Client portfolios are rebalanced periodically. FaceWallet assumes no responsibility to its Clients for any tax consequences of any transaction, including any capital gains that may result from the rebalancing of Client accounts.
- Tax-Loss Harvesting (“TLH”)
TLH is a technique designed to help lower your taxes while maintaining the expected risk and return profile of your portfolio. It harvests previously unrecognized investment losses to offset taxes due on your other gains and income by selling a security at loss to accelerate the realization of capital loss and investing the proceeds in a security with closely correlated risk and return characteristics. The realized loss can be applied to lower your tax liability and the tax savings can be reinvested to grow the value of your portfolio. FaceWallet’ basic TLH strategy, which is solely applied to ETFs, is available for all Clients. Advanced versions of TLH are available for Clients with larger account sizes and are generally applied to individual stocks that comprise the domestic equity allocation in their taxable account portfolios.
- Long Term, Buy and Hold Investment Philosophy
FaceWallet adheres to a long-term, “buy-and-hold” investment philosophy. While FaceWallet reserves the right to act otherwise if it feels that it is in the best interests of its Clients, FaceWallet does not try to time the market and in general, FaceWallet intentionally does not react to market movements in managing Client Accounts other than through rebalancing and tax-loss harvesting. FaceWallet believes that numerous academic and industry studies show that “short term fluctuations in market, which loom so large to investors, have little to do with the long-term accumulation of wealth.” J. Siegel, Stocks for the Long Run (1977).
- Risk Considerations
FaceWallet cannot guarantee any level of performance or that any Client will avoid a loss of Account assets. Any investment in securities involves the possibility of financial loss that Clients should be prepared to bear.
When evaluating risk, financial loss may be viewed differently by each Client and may depend on many different risk items, each of which may affect the probability of adverse consequences and the magnitude of any potential losses. The following risks may not be all-inclusive but should be considered carefully by a prospective Client before retaining FaceWallet’ services. These risks should be considered as possibilities, with additional regard to their actual probability of occurring and the effect on a Client if there is in fact an occurrence.
Market Risk – The price of any security or the value of an entire asset class can decline for a variety of reasons outside of FaceWallet’ control, including, but not limited to, changes in the macroeconomic environment, unpredictable market sentiment, forecasted or unforeseen economic developments, interest rates, regulatory changes, and domestic or foreign political, demographic, or social events. If a Client has a high allocation in a particular asset class, it may negatively affect overall performance to the extent that the asset class underperforms relative to other market assets. Conversely, a low allocation to a particular asset class that outperforms other asset classes in a particular period will cause that Client Account to underperform relative to the overall market.
Advisory Risk – There is no guarantee that FaceWallet’ judgment or investment decisions about particular securities or asset classes will necessarily produce the intended results. It is possible that Clients or FaceWallet itself may experience computer equipment failure, loss of internet access, viruses, or other events that may impair access to FaceWallet’ software-based investment advisory service. FaceWallet and its representatives are not responsible to any Client for losses unless caused by FaceWallet’ breach of its fiduciary duty.
Software Risk – FaceWallet delivers its investment advisory services entirely through software. Consequently, FaceWallet rigorously designs, develops and tests its software extensively before putting such software into production with actual Client accounts and assets and periodically monitors the behaviors of such software after its deployment. Notwithstanding this rigorous design, development, testing and monitoring, it is possible that such software may not always perform exactly as intended or as disclosed on the Site, mobile app, blogs or other FaceWallet disclosure documents, especially in certain combinations of unusual circumstances. For example, there may be occasions where a number of Client accounts may not experience TLH (even if TLH had been activated for such accounts) or rebalancing back to the Client’s target asset allocation for extended periods of time, due to certain errors in the deployment of the software. FaceWallet continuously strives to monitor, detect and correct any software that does not perform as expected or as disclosed.
Volatility and Correlation Risk – FaceWallet’ Security selection process is based in part on a careful evaluation of past price performance and volatility to evaluate future probabilities. It is possible that different or unrelated asset classes may exhibit similar price changes in similar directions which may adversely affect a Client’s account and may become more acute in times of market upheaval or high volatility. Past performance is no guarantee of future results, and any historical returns, expected returns, or probability projections may not reflect actual future performance.
Liquidity and Valuation Risk – High volatility and/or the lack of deep and active liquid markets for a security may prevent a Client from selling his or her securities at all, or at an advantageous time or price because FaceWallet’ executing broker-dealer may have difficulty finding a buyer and may be forced to sell at a significant discount to market value. Some securities (including ETFs) that hold or trade financial instruments may be adversely affected by liquidity issues as they manage their portfolios. While FaceWallet values the securities held in Client Accounts based on reasonably available exchange traded security data, FaceWallet may from time to time receive or use inaccurate data, which could adversely affect security valuations, transaction size for purchases or sales, and/or the resulting advisory fees paid by a Client to FaceWallet.
Credit Risk – FaceWallet cannot control and Clients are exposed to the risk that financial intermediaries or security issuers may experience adverse economic consequences that may include impaired credit ratings, default, bankruptcy or insolvency, any of which may affect portfolio values or management. This risk applies to assets on deposit with any broker-dealer, notwithstanding asset segregation and insurance requirements that are beneficial to broker-dealer clients generally. In addition, exchange trading venues or trade settlement and clearing intermediaries could experience adverse events that may temporarily or permanently limit trading
or adversely affect the value of Client securities. Finally, any issuer of securities may experience a credit event that could impair or erase the value of the issuer’s securities held by a Client. FaceWallet seeks to limit credit risk by generally adhering to the purchase of ETFs, which are subject to regulatory limits on asset segregation and leverage such that fund shareholders are given liquidation priority versus the fund issuer; however, certain funds and products, which FaceWallet generally does not invest in, may involve higher issuer credit risk because they are not structured as a registered fund.
Legislative and Tax Risk – Performance may directly or indirectly be affected by government legislation or regulation, which may include, but is not limited to: changes in investment adviser
/ financial advisor or securities trading regulation; change in the U.S. government’s guarantee of ultimate payment of principal and interest on certain government securities; and changes in the tax code that could affect interest income, income characterization and/or tax reporting obligations (particularly for ETF securities dealing in natural resources). FaceWallet does not engage in tax planning, and in certain circumstances a Client may incur taxable income on his or her investments without a cash distribution to pay the tax due.
Tax Loss Harvesting Risk – Clients who activate our tax-loss harvesting service are alerted to the following risks:
- Clients should confer with their personal tax advisor regarding the tax consequences of investing with FaceWallet and engaging in the tax-loss harvesting strategy, based on their particular circumstances. Clients and their personal tax advisors are responsible for how the transactions in the Client’s account are reported to the Internal Revenue Service (“IRS”) or any other taxing authority. FaceWallet assumes no responsibility to you for the tax consequences of any transaction, including any capital gains and/or wash sales that may result from the tax-loss harvesting strategy.
● FaceWallet’ tax-loss harvesting strategy is not intended as tax advice, and FaceWallet does not represent in any manner that the tax consequences described will be obtained or that FaceWallet’ investment strategy will result in any particular tax consequence. The tax consequences of this strategy and other FaceWallet strategies are complex and may be subject to challenge by the IRS. This strategy was not developed to be used by, and it cannot be used by, any investor to avoid penalties or interest.
● When FaceWallet replaces investments with “similar” investments as part of the tax-loss harvesting strategy, it is a reference to investments that are expected, but are not guaranteed, to perform similarly and that might lower a Client’s tax bill while maintaining a similar expected risk and return on the Client’s portfolio. Expected returns and risk characteristics are no guarantee of actual performance.
● A Client must notify FaceWallet of specific stocks in which the Client is prohibited from investing. If a Client instructs FaceWallet not to purchase certain stocks, FaceWallet will select an alternate stock to purchase on the Client’s behalf or if FaceWallet deems no other stock as appropriate, not invest in an alternate stock. The Client shall notify FaceWallet immediately if you consider
any investments recommended or made for the Account to violate such restrictions.
● The performance of the new securities purchased through the tax-loss harvesting service may be better or worse than the performance of the securities that are sold for tax-loss harvesting purposes.
● The effectiveness of the tax-loss harvesting strategy to reduce the tax liability of the client will depend on the client’s entire tax and investment profile, including purchases and dispositions in a Client’s (or Client’s spouse’s) accounts outside of FaceWallet and type of investments (e.g., taxable or nontaxable) or holding period (e.g., short- term or long-term). The utilization of losses harvested through the strategy will depend upon the recognition of capital gains in the same or a future tax period, and in addition may be subject to limitations under applicable tax laws, e.g., if there are insufficient realized gains in the tax period, the use of harvested losses may be limited to a $3,000 deduction against income and distributions. Losses harvested through the strategy that are not utilized in the tax period when recognized (e.g., because of insufficient capital gains and/or significant capital loss carryforwards), generally may be carried forward to offset future capital gains, if any.
● Be aware that if the Client and/or the Client’s spouse have other taxable or non-taxable investment accounts, and the Client holds in those accounts any of the securities (including options contracts) held in the Client Account, the Client cannot trade any of those securities 30 days before or after FaceWallet trades those same securities as part of the tax- loss harvesting strategy to avoid possible wash sales and, as a result, a nullification of any tax benefits of the strategy. For more information on the wash sale rule, please read IRS Publication 550.
● FaceWallet only monitors for tax-loss harvesting for Client’s accounts within FaceWallet. The Client is responsible for monitoring their and their spouse’s accounts outside of FaceWallet to ensure that transactions in the same security or a substantially similar security do not create a “wash sale.” A wash sale is the sale at a loss and purchase of the same security or substantially similar security within 30 days of each other. If a wash sale transaction occurs, the IRS may disallow or defer the loss for current tax reporting purposes. More specifically, the wash sale period for any sale at a loss consists of 61 calendar days: the day of the sale, the 30 days before the sale, and the 30 days after the sale. The wash sale rule postpones losses on a sale, if replacement shares are bought around the same time. FaceWallet may lack visibility to certain wash sales, should they occur as a result of external or unlinked accounts, and therefore FaceWallet may not be able to provide notice of such wash sale in advance of the Client’s receipt of the IRS Form 1099.
● Except as set forth below, FaceWallet will monitor only a Client’s accounts with FaceWallet to determine if there are unrealized losses for purposes of determining whether to harvest such losses. Transactions outside of accounts at FaceWallet may affect whether a loss is successfully harvested and, if so, whether that loss is usable by the Client in the most efficient manner.
● Under certain limited circumstances, there is a chance that FaceWallet trading attributed to tax-loss harvesting may create capital gains and/or wash sales. In addition, tax-loss harvesting strategies may produce losses, which may not be offset by sufficient gains in the account.
● In order to avoid wash sales due to one or more transactions in the Client’s taxable or IRA Accounts, from time-to-time, a Client’s IRA Account might invest in a so-called “secondary” ETF (as identified in FaceWallet’ TLH white paper) rather than a so-called “primary” ETF identified in such white paper or in the Client’s plan.
Potentially High Levels of Trading Risk – FaceWallet’ investment strategies, including portfolio rebalancing and tax-loss harvesting, can lead to high levels of trading. High levels of trading could result in (a) bid-ask spread expense; (b) trade executions that may occur at prices beyond the bid-ask spread (if quantity demanded exceeds quantity available at the bid or ask); (c) trading that may adversely move prices, such that subsequent transactions occur at worse prices; (d) trading that may disqualify some dividends from qualified dividend treatment; (e) unfulfilled orders or portfolio drift, in the event that markets are disorderly or trading halts altogether; and (f) unforeseen trading errors.
Foreign Investing and Emerging Markets Risk – Foreign investing involves risks not typically associated with U.S. investments, and the risks may be exacerbated further in emerging market countries. These risks may include, among others, adverse fluctuations in foreign currency values, as well as adverse political, social and economic developments affecting one or more foreign countries. In addition, foreign investing may involve less publicly available information and more volatile or less liquid securities markets, particularly in markets that trade a small number of securities, have unstable governments, or involve limited industry. Investments in foreign countries could be affected by factors not present in the U.S., such as restrictions on receiving the investment proceeds from a foreign country, foreign tax laws or tax withholding requirements, unique trade clearance or settlement procedures, and potential difficulties in enforcing contractual obligations or other legal rules that jeopardize shareholder protection. Foreign accounting may be less transparent than U.S. accounting practices and foreign regulation may be inadequate or irregular.
ETF Risks, including Net Asset Valuations and Tracking Error – ETF performance may not exactly match the performance of the index or market benchmark that the ETF is designed to track because 1) the ETF will incur expenses and transaction costs not incurred by any applicable index or market benchmark; 2) certain securities comprising the index or market benchmark tracked by the ETF may, from time to time, temporarily be unavailable; and 3) supply and demand in the market for either the ETF and/or for the securities held by the ETF may cause the ETF shares to trade at a premium or discount to the actual net asset value of the securities owned by the ETF. Certain ETF strategies may from time to time include the purchase of fixed income, commodities, foreign securities, American Depositary Receipts, or other securities for which expenses and commission rates could be higher than normally charged for exchange traded equity securities, and for which market quotations or valuation may be limited or inaccurate.
Clients should be aware that to the extent they invest in ETF securities they will pay two levels of advisory compensation – advisory fees charged by FaceWallet plus any management
fee charged by the issuer of the ETF. This scenario may cause a higher advisory cost (and potentially lower investment returns) than if a Client purchased the ETF directly.
An ETF typically includes embedded expenses that may reduce the fund’s net asset value, and therefore directly affect the fund’s performance and indirectly affect a Client’s portfolio performance or an index benchmark comparison. Expenses of the fund may include ETF management fees, custodian fees, brokerage commissions, and legal and accounting fees. ETF expenses may change from time to time at the sole discretion of the ETF issuer. FaceWallet discloses each ETF’s current information, including expenses, on the Site. ETF tracking error and expenses may vary.
Inflation, Currency, and Interest Rate Risks – Security prices and portfolio returns will likely vary in response to changes in inflation and interest rates. Inflation causes the value of future dollars to be worth less and may reduce the purchasing power of an investor’s future interest payments and principal. Inflation also generally leads to higher interest rates, which in turn may cause the value of many types of fixed income investments to decline. In addition, the relative value of the U.S. dollar-denominated assets primarily managed by FaceWallet may be affected by the risk that currency devaluations affect Client purchasing power.
College Savings Account Risks – College Savings Accounts are subject to various risks, including but not limited to:
Special Nature of Plan Interests – The Client and the Client’s beneficiary do not have access or rights to any assets of the state sponsoring our 529 Plan or any assets of the state trust of the Section 529 college savings plan (a “Plan”) other than the assets credited to the Client’s account for that beneficiary. The college savings account is an investment vehicle. College savings accounts are subject to certain risks including: (i) the possibility that the Client may lose money over short or even long periods of time; (ii) the risk of changes in applicable federal and state tax laws and regulations; (iii) the risk of Plan changes including changes in fees and expenses; and (iv) the risk that contributions to the college savings account may adversely affect the eligibility of the beneficiary or the Client for financial aid or other benefits. Some MFSs in a Client’s college savings account carry more and/or different risks than others. Clients should weigh such risks with the understanding that they could arise at any time during the life of the Client’s account.
Municipal Fund Securities – When the Client contributes to the college savings account, the Client’s money will be invested in MFSs. An investment in the Client’s college savings account is not a bank deposit. None of the Client’s account, the principal the Client invests, nor any investment return is insured or guaranteed by (i) any state or any state agencies, instrumentalities or funds, (ii) any officer, official, staff member of any state, (iii) any Plan or any program manager of any such Plan, (iv) any board of any state trust issuing MFSs for a Plan (a “Board”), (v) any such state trust (as “State Trust”), (vi) FaceWallet,
(vii) each of their respective affiliates, officials, officers, directors, employees and representatives, (viii) the federal government, (ix) the Federal Deposit Insurance Corporation (“FDIC”), or (x) any other governmental agency. Investment returns will vary depending upon the performance of the designated portfolios in the Client’s account. A Client could lose all or a portion of the Client’s investment.
Relatively Short Investment Time Horizon – Relative to investing for retirement, the holding period for college savings investors is very short (e.g., 10 years versus 60 years). Also, the need for liquidity during the withdrawal phase (to pay for qualified higher education expenses) generally is very important. Clients should strongly consider the level of risk they wish to assume when completing the risk questionnaire upon account opening.
Limited Investment Direction – Clients may not direct the underlying investments in their college savings account. The ongoing money management is the responsibility of FaceWallet. The only manner in which Clients can affect the money management is to change their risk score, which is limited to two times per year, or upon the change of the beneficiary. Once the permitted two per calendar year risk score changes are made in the Client’s account, a subsequent risk score change in the Client’s account within the same calendar year will not be processed. The choice of the underlying investments of the MFSs is subject to the approval of the Board. Automatic investment exchanges that occur as the Client’s assets move through the glide path do not count towards the Client’s twice per calendar year investment exchange limit.
Liquidity Risk – Investments in a Plan are considered less liquid than other types of investments (e.g., investments in mutual fund shares) because the circumstances in which a Client may withdraw money from a Plan account without a penalty or adverse tax consequences are significantly more limited.
Potential Changes to the Plan – Boards generally reserve the right, in their sole discretion, to discontinue the Plan or to change any aspect of the Plan. For example, the Board may change the Plan’s fees and expenses; add, subtract, or merge the MFSs; close a MFS to new investors; or change the program manager or the underlying investment(s) of a MFS. Depending on the nature of the change, a Client may be required to, or prohibited from, participating in the change with respect to accounts established before the change. A particular program manager may not necessarily continue as the Plan’s program manager, and FaceWallet may not necessarily continue as investment adviser and distributor to a Plan (although FaceWallet will continue as the Client’s investment adviser until either FaceWallet or the Client terminates that investment advisory relationship).
Changes to a Plan may or may not be beneficial to Clients. The Board may terminate the Plan by giving written notice to the Client, but even if the Board terminates the Plan, the Client and the Client’s beneficiary’s rights to the Client’s account assets will be unaffected. An MFS may be temporarily uninvested during a transition from one investment underlying an MFS to another underlying investment. The transaction costs associated with any liquidation, as well as any market impact on the value of the securities being liquidated, will be borne by the MFS which ultimately may impact the individual portfolios holding that MFS.
Status of Federal and State Law and Regulations Governing a Plan – Federal and state law and regulations governing the
administration of Plans could change in the future. In addition, federal
and state laws on related
matters, such as the funding
of higher education
expenses, treatment of financial aid, and tax matters are subject to frequent change. It is unknown what effect these kinds of changes could have on a college savings account. Clients should also consider the potential impact of any other state laws on their account. Clients should consult their tax advisor for more information.
Eligibility for Financial Aid – The treatment of college savings account assets may have an adverse effect on the beneficiary’s eligibility to receive assistance under various federal, state, and institutional financial aid programs.
No Guarantee That Investments Will Cover Qualified Higher Education Expenses; Inflation and Qualified Higher Education Expenses – There is no guarantee that the money in a Client’s college savings account will be sufficient to cover all of a beneficiary’s qualified higher education expenses, even if contributions are made in the maximum allowable amount for the beneficiary. The future rate of increase in qualified higher education expenses is uncertain and could exceed the rate of investment return earned by a Plan account over any relevant period of time.
Investors in any Plan should read the Plan’s offering documents and any related participation agreement carefully before investing or sending money.
Portfolio Line of Credit – Qualified clients who choose to use Interactive Brokers’s Portfolio Line of Credit are alerted to the following risks:
● Portfolio Line of Credit is a margin loan product offered exclusively to Clients of FaceWallet by Interactive Brokers. Clients should review the risks listed below and in https://www.interactivebrokers.com/en/index.php?f=1232 , and consider them before borrowing.
● Clients can lose more funds than deposited in their margin account. A decline in the value of securities that are purchased on margin may require Clients to provide Interactive Brokers with additional funds to avoid the forced sale of those securities or other securities or assets in their margin account(s).
● Interactive Brokers can force the sale of securities or other assets in Client margin account(s). If the equity in a Client margin account falls below the maintenance margin requirements, or our higher “house” requirements, Interactive Brokers can sell the securities or other assets in any of the Client’s margin account(s) held with Interactive Brokers to cover the margin deficiency. Clients also will be responsible for any shortfall in the margin account after such a sale.
● Interactive Brokers can sell Client securities or other assets in margin accounts without contacting the Client. Some investors mistakenly believe that a brokerage firm must contact them for a margin call to be valid, and that the brokerage firm cannot liquidate securities or other assets in their accounts to meet the call unless the brokerage firm has contacted them first. This is not the case. While Interactive Brokers will attempt to notify Clients of margin calls, Interactive Brokers is not required to do so. However, even if Interactive Brokers has contacted a Client and provided a specific date by which the
Client can meet a margin call, Interactive Brokers can still take necessary steps to protect its financial interests, including immediately selling the securities without notice to the Client.
● Clients are not entitled to choose which securities or other assets in their account(s) are liquidated or sold by Interactive Brokers to meet a margin call. Because the securities are collateral for the margin loan, Interactive Brokers has the right to decide which security to sell in order to protect its interests.
● Interactive Brokers can increase its “house” maintenance margin requirements at any time and are not required to provide advance written notice to Clients. These changes in Interactive Brokers’s policy often take effect immediately and may result in the issuance of a maintenance margin call. A Client failure to satisfy the call may cause Interactive Brokers to liquidate or sell securities in Client margin account(s).
● Clients 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 a Client under certain conditions, a Client does not have a right to the extension.
Item 7 Client Information Provided to Portfolio Managers
On a periodic basis, FaceWallet contacts each Client to remind them to review and update the investment profile information they previously provided. FaceWallet also requests that Clients reconfirm the same information on an annual basis. These notifications and confirmations include a link to the Client’s current information and contact information for the FaceWallet support team. Currently the FaceWallet team members whose tasks include supervising, arranging and responding to these notifications, confirmations and reviews are: the Client Services Manager and the Client Services team.
FaceWallet conducts separate reviews related to the ETFs used for Client portfolios. A committee comprised of FaceWallet’ CEO Keith SIilatsand certain other FaceWallet officers who are not members of the FaceWallet investment research team approves these reviews. The committee has the authority, if necessary, to remove, add or replace an ETF from the portfolios advised by FaceWallet.
Item 8 Client Contact with Portfolio Managers
All client contacts and communications regarding participation in the FaceWallet Program will occur through contact with FaceWallet via email, the Site or the App. If Client changes Client’s investment profile information, FaceWallet will promptly make any appropriate changes to Client’s Account portfolio. See Item 16 in FaceWallet’ Form ADV Part 2A brochure for a description of FaceWallet’ discretionary investment authority, including the timing of FaceWallet’ placement of trade orders, for while FaceWallet seeks to respond to Client deposits, Client changes in risk profiles, Client withdrawal requests, including without limitation requests in connection with terminations, and other reasonable Client requests in a timely and reasonable manner, FaceWallet does not
represent or guarantee that FaceWallet will respond to any such Client actions or requests immediately or in accordance with set time schedule.
Item 9 Additional Information
A. Disciplinary Information
- Other Financial Industry Activities and Affiliations
Interactive Brokers also exclusively offers its Portfolio Line of Credit, a margin loan product, to eligible FaceWallet’ Clients who meet certain minimum account thresholds.
FaceWallet’ investment plan also includes an allocation to the FaceWallet Fund, a proprietary mutual fund managed by FaceWallet. The fund invests in Risk Parity between SP500 and 10 year treasury notes.
In addition, Clients may choose to opt-out of their risk parity allocation at any time.
- Code of Ethics, Participation or Interest in Client Transactions and Personal Trading
FaceWallet’ paramount ethical, professional, and legal duty is to act at all times as a fiduciary to its Clients. This means that FaceWallet puts the interests of its Clients ahead of its own, and carefully manages for any perceived or actual conflict of interest that may arise in relation to its advisory services. FaceWallet has adopted a Code of Ethics, which is designed to ensure that we meet our fiduciary obligation to Clients, enhance our culture of compliance within the firm, and detect and prevent any violations of securities laws.
FaceWallet’ Code of Ethics (the “Code”) establishes standards of conduct for all FaceWallet’ “Employees” (as defined in the Code), including all officers, directors, employees, certain contractors and others, and is consistent with the code of ethics requirements of Rule 204A-1 under the Investment Act of 1940, as amended. The Code includes general requirements that all Employees comply with their fiduciary obligations to Clients and applicable securities laws, and specific requirements relating to, among other things, personal trading, insider trading, conflicts of interest, and confidentiality of client information.
Each new FaceWallet’ Employee receives a copy of the Code when hired or engaged by FaceWallet. FaceWallet sends copies of any amendments to the Code to all Supervised Persons, who must acknowledge in writing having received the Code and the amendments. Annually or as otherwise required, each Supervised Person must confirm to FaceWallet that he or she has complied with the Code during such preceding period.
With certain exceptions specified in the Code, under the Code, FaceWallet’ Employees may personally invest in securities recommended by FaceWallet, specifically the ETFs recommended for each asset class and individual large and mid-capitalization stocks recommended for advanced forms of TLH. Transactions in ETFs have been pre-approved for trading by FaceWallet’ Chief Compliance Officer based on the security’s liquidity profile and structural characteristics. FaceWallet’ Employees may also buy or sell specific securities for their own accounts that are not purchased or sold for Clients. Under certain circumstances, Employees may also buy and sell securities that are bought or sold for Clients. These personal transactions require pre-approval from FaceWallet’ compliance department who determines if any actual or perceived conflicts exists with Clients. These personal securities transactions are subject to certain limitations such as the size of the trade and the market capitalization size of the issuer company. FaceWallet monitors the securities transactions of all Employees and investigates any failure to receive pre-clearance as well as any unusual patterns that it detects. It also requires all Employees to report any violations of the Code promptly to FaceWallet’ Chief Compliance Officer. The complete Code of Ethics is available to
any client or prospective Client upon request.
- Review of Accounts
FaceWallet provides all Clients with continuous access via the Site where Clients can access their Account documents, such as account statements, and review their time-weighted and money-weighted returns. Clients may also receive periodic e-mail communications describing portfolio performance, Account information, and product features.
FaceWallet’ software-based investment advisory service assumes that a portfolio created using MPT-based techniques will not stay optimized over time and must be periodically rebalanced back to its original targets to maintain the intended risk level and asset allocations. FaceWallet reviews each Client’s Account when it is opened and using software, continuously monitors and periodically rebalances each Client’s portfolio to seek to maintain a Client’s targeted risk tolerance and optimal return for the Client’s risk level. FaceWallet also conducts reviews when Clients make changes to their risk profiles. FaceWallet may consider tax implications and the volatility associated with each of the chosen asset classes when deciding when and how to rebalance, however no assurance can be made by FaceWallet that Clients will not incur capital gains, and in certain instances significant capital gains, when Client portfolios are rebalanced periodically. FaceWallet assumes no responsibility to its Clients for any tax consequences of any transaction, including any capital gains that may result from the rebalancing of Client accounts.
On a periodic basis, FaceWallet contacts each Client to remind them to review and update personal profile information they previously provided. FaceWallet also requests that Clients reconfirm the same information on an annual basis. These notifications and confirmations include a link to the Client’s current information and contact information for the FaceWallet support team. Currently the FaceWallet team members whose tasks include supervising, arranging and responding to these notifications, confirmations and reviews are: the Client Services Manager and the Client Services team.
FaceWallet periodically reviews the ETFs used for Client portfolios. FaceWallet’ Investment Committee, a committee comprised of FaceWallet’ CEO Keith Siilats and certain other FaceWallet officers who are not members of FaceWallet investment research team, approves of these reviews. The committee has the authority, if necessary, to remove, add or replace an ETF from the portfolios advised by FaceWallet.
- Client Referrals and Other Compensation
FaceWallet expects from time to time to run promotional campaigns to attract Clients to open Accounts on the Site. These promotions may include additional Account services or products offered on a limited basis to select Clients, more favorable fee arrangements, and/or reduced or waived advisory fees for Clients, including FaceWallet’ Invite Program pursuant to which Clients may invite friends, family and others to open an account with FaceWallet. FaceWallet waives its advisory fee on $5,000 of Account assets for both the referring Client and the referred Client for each referral. FaceWallet may also invite non-Clients to open an account with FaceWallet via the Invite Program. For non-Clients who become
Clients via direct invitation from FaceWallet, FaceWallet will waive its advisory fee on a predetermined amount of the Client’s Account assets.
These arrangements may create an incentive for a third party or other existing Client to refer prospective Clients to FaceWallet, even if the third party would otherwise not make the referral. These arrangements may also create a conflict of interest for a Client to maintain a certain level of assets managed through FaceWallet if doing so would result in eligibility to receive an incentive, bonus or additional compensation.
In the past, FaceWallet had certain arrangements in which it paid bloggers and others who posted advertisements for FaceWallet based on the assets initially deposited by individuals responding to such advertisements. Currently, FaceWallet has certain arrangements in which it pays bloggers and others who post advertisements for FaceWallet a flat fee per client responding to such advertisements who opens an account regardless of whether said client funds the account.
- Financial Information
FaceWallet does not require or solicit the prepayment of any advisory fees and does not have any adverse financial condition that is reasonably likely to impair our ability to continuously meet our contractual commitments to our Clients.
ESIGN Consent to Use Electronic Records, Disclosures and Signatures
In this ESIGN Consent to Use Electronic Records, Disclosures and Signatures (“Consent”), please remember that “you” and “your” refer to the person who is establishing an account, as well as any future accounts, with us, and “we”, “us” and “our” refer to Bytelogics Inc (“FaceWallet”) and Interactive Brokers Inc (“Interactive Brokers” and formerly known as Interactive Brokers Corporation) as the case may be (collectively, the “Company”). “Communications” means each disclosure, notice, agreement, fee schedule, statement, record, document, and other information we provide to you, or that you sign or submit or agree to at our request.
By opening an account with us (each an “Account” or a FaceWallet Account) and then accessing your Account, you are consenting to the following terms:
- Your consent to use and delivery of electronic records and disclosures.
In our sole discretion, the Communications we provide to you, or that you sign or agree to at our request, may be delivered to you in electronic form (“Electronic Records”). You specifically agree to the electronic delivery (i.e. the receipt and/or obtaining) of Electronic Records and Disclosures from the Company. The term “Electronic Records” includes, but is not limited to, any and all current and future notices and/or disclosures, prospectuses, statement of additional information, annual and semi-annual reports that various federal and/or state laws or regulations require that the Company provides to you, as well as such other documents, statements, data, records and any other communications regarding your relationship to the Company. You acknowledge that, for your records, you are able to retain the Company’s Electronic Communications by printing and/or downloading and saving this Consent and any other agreements and Electronic Communications, documents, or records that you agree to using your E- Signature (as defined below). You accept Electronic Communications provided via your account with the Company as reasonable and proper notice, for the purpose of any and all laws, rules, and regulations, and agree that such electronic form fully satisfies any requirement that such communications be provided to you in writing or in a form that you may keep.
The following are examples of Electronic Records and Disclosures covered by your Consent:
- Advisory Client Agreement with Bytelogics Inc and all amendments, notices and
other agreements that supplement
the Advisory Client Agreement
(the “Advisory Client Agreement”);
- Customer Brokerage and Custody Agreement with Interactive Brokers Inc and all amendments, notices and other agreements that supplement the Customer Brokerage and Custody Agreement (the “Customer Brokerage and Custody Agreement”);
- Any other agreements pertaining to future accounts that you may establish with FaceWallet and/or Interactive Brokers and all amendments, notices and other agreements that supplement those agreements;
- FaceWallet’ Form ADV Part 2 (including
FaceWallet Program Brochure), Notice
permitted legal disclosures; and
- Statements and reports, including without limitation account statements, fee calculation statements, transactions histories, trade confirmations, tax forms, reports and/or performance reports, prospectuses, statement of additional information, annual and semi-annual reports of mutual funds and exchange traded funds (ETFs).
- Your acknowledgement and consent to Electronic Signature.
You agree that your use of a key pad, mouse or other
device to select an item, button, icon or similar act/action, or to otherwise provide the Company with instructions, or in accessing
or making any transaction regarding any
agreement, acknowledgement, consent terms, disclosures or conditions
constitutes your signature
(hereafter referred to as
“E- Signature”), acceptance and agreement as if actually signed by
you in writing. You acknowledge you
are signing this Consent, the Advisory Client Agreement
and the Customer Brokerage and Custody Agreement
with an E-Signature. You agree
your E-Signature is the legal equivalent of your manual signature on this
Consent, the Advisory Client Agreement and the Customer Brokerage and
Custody Agreement. You consent to be
legally bound by this Consent’s terms
and conditions. You also agree that
no certification authority or other third-party verification
is necessary to validate your E-Signature and that the lack of such
certification or third party verification
will not in any way affect the
enforceability of your E-Signature or any resulting contract between you and
the Company. You represent that you are authorized to execute this Consent, the Advisory Client Agreement
and the Customer
Brokerage and Custody Agreement for all persons who own or are authorized to access any of your accounts and that such persons will be bound by the terms of this Consent, the Advisory Client Agreement and the Customer Brokerage and Custody Agreement.
- Paper versions of Electronic Communications.
You may obtain a paper copy of the Electronic Records, at any time by notifying us via support@FaceWallet.io. We will not charge you a fee for the paper copy.
- Revocation of electronic delivery.
This Consent will apply on an ongoing basis unless you withdraw this Consent. You have the right to withdraw the Consent to Electronic Records and the use of your E-Signature at any time. You acknowledge that we reserve the right to restrict or terminate your access to FaceWallet, including without limitation the FaceWallet Advisers’ website (“Site”) and its mobile application (“App”), if you withdraw Consent to Electronic Records and E-Signatures. If you wish to withdraw your Consent, contact us at support@FaceWallet.io.
- Hardware, software and operating system.
To receive the Electronic Records, you will need a computer or mobile device with a compatible operating system and web browser, and connection to the Internet, and you will need access to a printer or the ability to download information in trading instruction to keep copies for your records. The currently compatible operating systems and web browsers are identified at https://www.FaceWallet.io/system-requirements. Changes, if any, to these system hardware and software requirements will be updated on the Site or in the App. You must periodically refer to the Site or the App for current system requirements. By establishing and then accessing an Account, you are indicating that you have the capability to access the agreements and other information, including the disclosures, and download or print copies for your records. You are responsible for installation, maintenance, and operation of your computer, mobile device, browser and software. The Company is not responsible for errors or failures from any malfunction of your computer, browser or software. The Company is also not responsible for computer viruses or related problems associated with use of an online system. The currently compatible computer and mobile device operating systems and web browsers are identified at https://www.FaceWallet.io/system-requirements.
The following are the minimum hardware, software and operating system requirements necessary to use FaceWallet. and receive Electronic Communications:
- a Current Version of an Internet browser we support,
- a connection to the Internet,
- a Current Version of a program that accurately reads and displays PDF files (such as Adobe Acrobat Reader), and
- a computer or mobile device and an operating system capable of supporting all of the above. You will also need a printer if you wish to print out and retain records on paper, and electronic storage if you wish to retain records in electronic form
You must also have an active email address.
By “Current Version,” we mean a version of the software that is currently being supported by its publisher.
It is recommended that you print a copy of this
Agreement for future reference.
Questions and Contacting Us
Important Information You Need to Know about Opening a New Account
To help the government fight money laundering activities and the funding of terrorism, federal law requires financial institutions to obtain, verify and record information that identifies each person who opens an account.
This notice answers some questions about FaceWallet and Interactive Brokers’s Client Identification Program.
What types of information will you need to provide?
When you open an account, FaceWallet and Interactive Brokers is required to collect the following information:
- Date of Birth
- Identification Number:
- U.S. Citizen: taxpayer identification number (Social Security number or employer identification number)
- Non-U.S. citizen: taxpayer identification number; passport number and country of issuance; alien identification card number; or government-issued identification showing nationality, residence and a photograph of you.
You may also need to show your driver’s license or other identifying documents.
A corporation, partnership, trust or other legal entity may need to provide other information, such as its principal place of business, local office, employer identification number, certified articles of incorporation, government- issued business license, a partnership agreement or a trust agreement and information regarding its direct and indirect beneficial owners.
U.S. Department of the Treasury, Securities and Exchange Commission and FINRA rules already require you to provide most of this information. These rules also may require you to provide additional information, such as your net worth, annual income, occupation, employment information, investment experience and objectives and risk tolerance.
What happens if you don’t provide the information requested or your identity can’t be verified?
and Interactive Brokers may not be
able to open an account or carry out transactions for you. If we have already opened an account for you, we may have to close it.
Customer Brokerage and Custody Agreement
By entering into the Advisory Client Agreement (the “Account Agreement”) with Bytelogics Inc (“FaceWallet,”.) you agree to enter into this Customer Brokerage and Custody Agreement (this “Brokerage Agreement”) with Interactive Brokers Inc (“Interactive Brokers” and formerly known as Interactive Brokers Corporation).
Account or Accounts means Cash Account(s) and FaceWallet Account(s) collectively.
Basic Brokerage Services means the following services provided by Interactive Brokers pursuant to this Brokerage Agreement: (i) the routing of purchase and sale trading instructions to the Clearing Broker; (ii) omnibus custody of funds and Securities held by the Clearing Broker in an Omnibus Account pursuant to the Clearing Agreement; and (iii) the maintenance of your Account by Interactive Brokers, which includes accounting, valuation, recordkeeping, and reporting for activity in your Account.
Business Day means a day when the New York Stock Exchange opens for trading during all or part of a day.
Cash Account means such accounts that Interactive Brokers establishes and carries for you to hold your funds and record your transactions pursuant to your discretion and instructions.
Clearing Agreement means the Omnibus Clearing Agreement between Interactive Brokers and the Clearing Broker.
Clearing Broker means a broker, if any, that Interactive Brokers engages to provide clearance or settlement services for purchase and sale transactions or to hold Securities in Interactive Brokers’s name. If Interactive Brokers engages more than one Clearing Broker, Clearing Broker means the broker that provides the applicable services referenced in the context in which the term is used.
Designated Sweep Vehicle means the RBC U.S. Government Money Market Fund and/or such other U.S. Government money market fund that Interactive Brokers selects (the “Money Market Fund Sweep Option”), or an account at a bank whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC) (the “FDIC Insured Bank Sweep Option”).
Indemnified Persons means affiliates, officers, directors, managers, members, employees, representatives, successors, assigns, and authorized agents of either FaceWallet or Interactive Brokers.
Omnibus Account means an account carried and cleared by Clearing Broker that contains accounts of undisclosed customers on a commingled basis and that are carried individually on the books of Interactive Brokers.
Optional Brokerage Services means (i) margin lending, or (ii) other optional brokerage services that may be made available to you from time to time by Interactive Brokers, each of which service shall be governed by a separate written agreement.
Plan means the investment plan recommended by FaceWallet to you, including any of FaceWallet’ PassivePlus suite of investment options designated by you.
Security has the meaning set forth in Section 202(a)(18) of the Investment Act of 1940, as amended, including primarily without limitation stocks, exchange traded funds (ETFs), mutual funds, and/or similarly traded instruments.
FaceWallet Account means all accounts, except Cash Accounts, that Interactive Brokers establishes and carries for you to hold your securities and money and record your transactions pursuant to the Plan, and in accordance with FaceWallet Adviser’s discretionary authority and instructions.
2. Agency, Custody, and Trading
Interactive Brokers as your agent to hold your Account(s) and carry out instructions, including
instructions for purchases and sales of Securities by you (with respect
to Cash Accounts) or by FaceWallet (with respect to
FaceWallet Accounts) and to act and rely on other instructions that you or FaceWallet transmits or provides on your behalf. You assume all investment risk with respect to your Account(s). All transactions in your FaceWallet Account will be executed only on the trading instruction of FaceWallet, acting as your authorized representative pursuant to the Account Agreement, except as provided by this Brokerage Agreement or otherwise agreed to by you. You authorize Interactive Brokers, as your agent, to establish relationships with the Clearing Broker, and to appoint and use other sub-agents. You authorize Interactive Brokers and its sub-agents to take reasonable steps in connection with your Account(s) and its rights and obligations under this Brokerage Agreement, including: opening, closing, and holding the Account(s) in your name; making and retaining customer, account, and transaction records; holding securities in bearer, registered, or book entry form; and placing, transmitting, and withdrawing trading instructions for transactions, including the trading instructions authorized by you in the Account Agreement and placed by you or FaceWallet on your behalf; effecting purchases and sales of Securities and other transactions, including without limitation transactions in securities or bank accounts maintained in Interactive Brokers’s name for the benefit of Interactive Brokers’s customers and reconciling such transactions with transactions in your Account(s); holding securities and money attributable to your Account(s) in securities or bank accounts maintained in Interactive Brokers’s name for the benefit of Interactive Brokers’s customers and thus commingling such securities and money with that of other customers in the FaceWallet Program. You agree that Interactive Brokers may, in its sole discretion and without prior notice to you, refuse or restrict trading instructions placed by you or by FaceWallet on your behalf.
You authorize Interactive Brokers to accept from FaceWallet trading instructions assembled by FaceWallet that combine purchases and sales of Securities in your FaceWallet Account with purchases and sales of the same Securities for accounts of other clients.
You agree that (i) Interactive Brokers will route trade instructions to executing brokers for execution; (ii) Clearing Interactive Brokers will clear and settle transactions in your Account(s); (iii) Interactive Brokers does not act as the executing broker’s or the Clearing Broker’s agent; and (iv) unless Interactive Brokers receives a written notice from you to the contrary, the Clearing Broker may accept from Interactive Brokers any instructions relating to your Account(s), without inquiry or investigation, including trading instructions placed by FaceWallet with respect to your FaceWallet Account on your behalf for purchases or sales of Securities. You acknowledge and agree that Interactive Brokers will not route trading instructions to markets for execution other than through executing brokers selected by Interactive Brokers or obtain clearance and settlement services for your transactions related to your Account(s) other than from the Clearing Broker.
You also acknowledge and agree that (i) the cash balances in your Account(s), including in your Cash Account(s), are intended for investing in Securities at such appropriate time as determined by FaceWallet with respect to the FaceWallet Account(s) and by you with respect to the Cash Account(s); (ii) when you initiate a transfer from your FaceWallet Account to your Cash Account, it may take up to five (5) Business Days for your funds to reach the FDIC- insured participating banks – FDIC insurance is not provided and your funds will not earn interest until your funds arrive at the participating banks; and (iii) when you initiate a transfer from your Cash Account to your FaceWallet Account, it may take up to three (3) Business Days for your funds to reach your FaceWallet Account to be invested in Securities, and your funds will not be covered by FDIC insurance nor will it earn interest once it leaves the participating banks.
3. Association with Any Broker-Dealer
You certify that you are not employed by or registered with a broker-dealer or other employer whose consent is required to open and maintain your Account unless you have provided the consent to us. If you are employed by such an entity, please email compliance@FaceWallet.io to provide consent and pertinent information. You agree that Interactive Brokers will provide to your employer duplicate electronic statements and/or trade confirmations for your Account, according to the requirements of your firm, as provided by industry regulations, if you are employed by or registered with a broker-dealer or other firm with outside account oversight requirements for access or other persons.
4. FaceWallet Account Activity Limitations
4.1 Limitations on Transaction Types
acknowledge that your FaceWallet Account is a special type of brokerage account
because it is to be used only in connection with FaceWallet. You further
acknowledge that many types of typical brokerage products, services, and
transactions are not available in your FaceWallet Account. The types of
products, services, and transactions that will, subject to the terms and
conditions of the Account Agreement and this Brokerage Agreement, generally not be available in your FaceWallet
Account and that you shall have no right to request of or obtain from
Interactive Brokers include without limitation: (i) purchases or sales of Securities other than in connection with the Plan; (ii) transactions in corporate bonds, municipal or other government securities, private fund interests, limited partnership interests, or any securities other than the Securities included in the Plan; (iii) short sales; (iv) transactions in currency or foreign exchange; and (v) forwards, swaps, security-based swaps, security futures, warrants, options, structured products, or other derivatives.
4.2 No Investment Advice or Recommendation by Interactive Brokers
You acknowledge that FaceWallet provides and is solely responsible for all investment advice and investment advisory services given in connection with the Plan. You agree that, notwithstanding anything to the contrary in either the Account Agreement or this Brokerage Agreement, Interactive Brokers does not provide and is not responsible for any such advice or services in connection with the Plan and does not recommend securities or transactions in connection with the Plan or otherwise.
4.3 No Voting of Securities
You agree that voting of Securities in your FaceWallet Account is the responsibility of FaceWallet. Interactive Brokers agrees that it shall have no right under the Plan to vote, and shall not vote, any Securities in your FaceWallet Account.
5. Statements and Confirmations
You agree that you are responsible for reviewing all statements and confirmations for your Account(s). Statements and confirmations shall be considered accurate unless you notify FaceWallet or Interactive Brokers in writing no later than ten Business Days after receipt of the applicable statement or confirmation that the information is inaccurate. Notifications and other inquiries concerning the balance and positions in your Account(s) should be directed to support@FaceWallet.io.
6. Indebtedness, Cancellation, Payment on Demand
Whenever in Interactive Brokers’s discretion Interactive Brokers
considers it necessary for Interactive Brokers’s protection, or for the
protection of FaceWallet or in the event of, but not limited to; (i) any breach
by you of this or any other agreement with Interactive Brokers or (ii) your
failure to pay for securities and other property purchased
or (iii) to deliver Securities and other property
sold or (iv) insufficient funds
in your Accounts for any reason, Interactive Brokers may sell any or
all Securities and other property held in any of your Accounts (either
individually or jointly with others), cancel or complete any open trading
instructions for the purchase or sale of any Securities and other property,
and/or borrow or buy-in any Securities and other property required to make
delivery against any sale effected for you, all without notice or demand for
deposit of collateral, other notice of sale or purchase, or other notice or
advertisement, each of which is expressly waived by you. Interactive Brokers
may require you to deposit cash or adequate collateral to your Account prior to
any settlement date in trading instruction to
assure the performance or payment of any open contractual commitments and/or unsettled transactions. Interactive Brokers has the right to refuse to execute
securities transactions for you at any time and for any reason. The Securities,
monies and/or other property Interactive Brokers holds for you or in which you
may have an interest held by Interactive Brokers or carried in any of your Accounts
with or jointly
with others shall
be subject to a lien, a
continuing and perfected security interest, and a right
of set-off for the discharge of any and all indebtedness or any other
obligation you may have to FaceWallet or Interactive Brokers, wherever or
however arising and without regard to whether or not Interactive Brokers has
made advances with respect to such Securities and other property, and are to be
held by Interactive Brokers as security for the payment of any liability or
indebtedness in your Account(s) to Interactive
Brokers, FaceWallet, or any of its affiliates. In connection with enforcing
Interactive Brokers’s lien, perfected security interest or right of set-off, Interactive
Brokers may, at any time and without giving you prior notice, use, transfer,
purchase, sell or otherwise liquidate any or all of your Securities, monies and/or
other property in your Account
and/or to transfer
any such Securities and other property
among any of your
Accounts to the fullest extent of the law and without notice where allowed,
to satisfy a debt or any other obligation
you may have to Interactive Brokers, FaceWallet, or any of their affiliates. As
part of Interactive Brokers’s right of enforcement under this Section 6.1, Interactive
Brokers shall have the sole discretion to determine which Securities are to be
liquidated without regard to any tax or other consequences you may face as a
result of such liquidation. If you breach either the Account Agreement
or this Brokerage Agreement, FaceWallet
Brokerage maintains all of the rights and remedies provided in this Brokerage Agreement. You agree to indemnify and hold Interactive Brokers, FaceWallet, their affiliates and the Indemnified Persons harmless from and against any losses, costs or expenses incurred or payable in connection with (i) Interactive Brokers’s remedies under this Section 6.1, including without limitation reasonable costs of collection, including without limitation attorneys’ fees and expenses, or (ii) defense of any matter arising out of your Securities transactions. The Interactive Brokers shall, without limiting its other rights under this Section 6.1, have the right to offset amounts you owe Interactive Brokers, FaceWallet, or any of their affiliates against any amounts Interactive Brokers, FaceWallet, or any of their affiliates owes you. You will remain liable for the deficiency. You will pay the reasonable costs and expenses of any debit balance and any unpaid deficiency in any of your Accounts, including without limitation attorney fees and costs incurred by Interactive Brokers, FaceWallet, or any of their affiliates.
Interactive Brokers is authorized at Interactive Brokers’s sole discretion and without notice to you to cancel any outstanding trading instruction, to close out your Accounts, in whole or in part, or to close out any commitment made on behalf of you.
6.3 Account Restrictions
Interactive Brokers is authorized at Interactive Brokers’s sole discretion and without notice to you to restrict trading of Securities in one or more of your Accounts, or to limit the trading to certain Securities in one or more of your Accounts.
6.4 Payment of Indebtedness on Demand
You shall at all times be liable for the payment upon demand of any obligations owing from you to Interactive Brokers, FaceWallet, or any of their affiliates, and you shall be liable to Interactive Brokers for any deficiency remaining in any such Accounts in the event of the liquidation thereof (as contemplated in Section 6.1 of this Brokerage Agreement or otherwise), in whole or in part, by Interactive Brokers or by you; and you shall make payment of such obligations upon demand.
7.1 Purchases, Sales, and Custody
Interactive Brokers agrees that you shall not be obligated to pay any fee for the Basic Brokerage Services other than FaceWallet’ advisory fee under the Account Agreement with respect to your FaceWallet Accounts. You acknowledge that FaceWallet may cause payment to be made to Interactive Brokers out of the proceeds of the advisory fee pursuant to an affiliate agreement. You acknowledge that Interactive Brokers may use a portion of the payments it receives from FaceWallet to compensate the Clearing Broker for execution, clearance, and settlement services for purchase and sales of Securities in your Accounts.
7.2 Additional Fees for Irregular Services and Optional Brokerage Services
Interactive Brokers reserves the right to charge reasonable fees for some in-kind withdrawals, preparation and delivery of paper confirmations or statements, rejected payments, and, if approved by FaceWallet (with respect to FaceWallet Accounts) in its sole discretion in accordance with the Account Agreement, wire transfers. Interactive Brokers reserves the right to waive or reduce, in its sole discretion, any fees for irregular services described in this Section 8.2. You agree that Interactive Brokers may charge reasonable and customary fees for services that are not Basic Brokerage Services, that are not expressly referenced in the Account Agreement, and that Interactive Brokers agrees in its sole discretion to perform on a case-by-case basis. Fees for Optional Brokerage Services shall be as set forth in the separate written agreements pertaining to such services.
7.3 Fee Deduction
You authorize Interactive
Brokers to deduct FaceWallet’ advisory fee you owe under the Account Agreement from your FaceWallet Account in accordance with instructions from FaceWallet. You authorize
Interactive Brokers to pay all or part of such advisory fee to FaceWallet
and/or to share all or part of such advisory fee with affiliates in accordance
with the applicable intercompany agreements. You authorize Interactive Brokers
to deduct any additional fees you owe Interactive Brokers or FaceWallet under
any provision of either of the Account Agreement or this Brokerage Agreement with respect to your FaceWallet Accounts. You authorize Interactive Brokers to initiate sales to liquidate Securities in amounts sufficient to pay any fees you owe with respect to the FaceWallet Accounts under any provision of either of the Account Agreement or this Brokerage Agreement.
8. Customer Support
You acknowledge that you may obtain information, ask questions, and receive support regarding your Accounts and its transactions and holdings by contacting Interactive Brokers at support@FaceWallet.io or during the hours of 7:00 am to 5:00 pm Pacific Time at (646) 515 6388.
10. Securities Investor Protection Corporation
Interactive Brokers is a member of the Securities Investor Protection Corporation (“SIPC”). SIPC protects client accounts against the loss of securities in the event of the member’s insolvency and liquidation of a broker-dealer by replacing missing securities and cash up to a maximum of $500,000 per client, including a $250,000 limit for claims for cash. SIPC does not protect you against losses from changes in the market values of your investments. For more information on SIPC coverage, please contact SIPC at www.sipc.org or (202) 371-8300.
11. Funds Transfers
11.1 Your Liability for Unauthorized Transfers
You acknowledge that you could lose the entire value of your Accounts through any unauthorized electronic funds transfer, including an unauthorized withdrawal. If you suspect any unauthorized electronic funds transfer, you must notify FaceWallet (with respect to FaceWallet Accounts) or Interactive Brokers (for all Accounts) within two Business Days after you learn of the unauthorized transfer. If you do not notify FaceWallet or Interactive Brokers within two Business Days after you learn of an unauthorized electronic funds transfer, and Interactive Brokers can prove that it could have stopped someone from making the unauthorized transfer if you had notified it, then you can lose the lesser of (i) $50 or (ii) the amount of the unauthorized transfers that occur within the two Business Days plus the amount of the unauthorized transfers that occur after the two Business Days and before you notified FaceWallet or Interactive Brokers, provided that Interactive Brokers can establish that these unauthorized transfers would not have occurred had you notified FaceWallet or Interactive Brokers within the two Business Days. If you do not notify FaceWallet or Interactive Brokers within 60 days after Interactive Brokers sends you the applicable statement showing an unauthorized electronic funds transfer, you may not get back any money you lost after the 60 days if Interactive Brokers can show that it could have stopped the unauthorized transfer had you notified it in time. Interactive Brokers will extend the notification periods for unauthorized transfers in this Section if there are extenuating circumstances such as extended travel or a hospital stay.
11.2 Phone Number and Email Address for Unauthorized Transfer Notification
If you believe that an unauthorized transfer has occurred in any of your Accounts, please call Interactive Brokers immediately at (646) 515 6388 or email support@FaceWallet.io.
11.3 Error Resolution
In case of errors or questions
about your electronic transfers or if you think your statement
or receipt is wrong, please call at (646) 515 6388 or email Interactive
Brokers at support@FaceWallet.io as soon
as you can. Interactive Brokers will tell you the results within three Business
Days after completing an investigation. If Interactive Brokers decides that
there was no error, it will send you a written explanation. You may ask for
copies of the documents that Interactive Brokers used in its investigation.
11.4 Restrictions on Deposits into Accounts
Notwithstanding anything to the contrary in this Agreement, for purposes of account security, regulatory compliance and risk-management, funds transferred into your Account(s) may be held by Interactive Brokers for up to sixty
(60) days upon such transfer of funds into your Account(s). Such transferred funds may be held for a longer period if compliance with federal regulations or risk-management procedures would require us to do so. Except in cases of fraud or for funds that are returned to the originating bank as a result of insufficient funds, your transferred funds in the Cash Account will be entitled to earn interest during such hold period when they arrive at the Participating Banks and the funds in your FaceWallet Account will be invested in accordance with your risk profile.
11.5 Restrictions on Withdrawals from Accounts
Notwithstanding anything to the contrary in this Agreement, for purposes of account security, regulatory compliance and risk-management, and notwithstanding any instructions from you to the contrary, Interactive Brokers may, at its sole discretion, not honor a withdrawal request of funds to an external bank account that Interactive Brokers is not able to fully verify as belonging to you. In such cases, Interactive Brokers reserves the right to send such requested funds to the depository account at the originating bank of such funds.
12. Abandoned Accounts
The Interactive Brokers shall have the right to report, escheat, and deliver assets in your Accounts to the state of your address of record if Interactive Brokers determines that an account has been abandoned in accordance with applicable state law.
Interactive Brokers acts in a brokerage capacity in relation to the Plan and your Account(s) and is not in a fiduciary relationship with you. A brokerage relationship is not held to the same legal standard as an investment advisory relationship.
The Interactive Brokers may assign its rights and obligations under this Brokerage Agreement to any subsidiary or affiliate without notice to you or to any other entity with written notice to you. Any rights that Interactive Brokers or the Clearing Broker has under this Brokerage Agreement may be assigned to the other, including the right to collect any debit balance or other obligations owing in your Account(s).
15. Dispute Resolution
THIS AGREEMENT CONTAINS A PREDISPUTE ARBITRATION CLAUSE. BY SIGNING AN ARBITRATION AGREEMENT THE PARTIES AGREE AS FOLLOWS:
15.1 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 (i) AS PROVIDED BY THE RULES OF THE ARBITRATION FORM IN WHICH A CLAIM IS FILED; AND (ii) NOTHING IN THIS AGREEMENT SHALL LIMIT YOUR RIGHT TO INITIATE OR PARTICIPATE IN A CLASS ACTION LAWSUIT IN A U.S. COURT TO THE EXTENT SUCH RIGHT MAY NOT BE WAIVED UNDER ANY APPLICABLE FINRA RULES.
15.2 ARBITRATION AWARDS ARE GENERALLY FINAL AND BINDING; A PARTY’S ABILITY TO HAVE A COURT REVERSE OR MODIFY AN ARBITRATION AWARD IS VERY LIMITED;
15.3 THE ABILITY OF THE PARTIES TO OBTAIN DOCUMENTS, WITNESS STATEMENTS AND OTHER DISCOVERY IS GENERALLY MORE LIMITED IN ARBITRATION THAN IN COURT PROCEEDINGS;
15.4 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.
15.5 THE PANEL OF ARBITRATORS MAY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.
15.6 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.
15.7 THE RULES OF THE ARBITRATION FORUM IN WHICH THE CLAIM IS FILED, AND ANY AMENDMENTS THERETO, SHALL BE INCORPORATED INTO THIS AGREEMENT.
THE FOLLOWING ARBITRATION AGREEMENT SHOULD BE READ IN CONJUNCTION WITH THE DISCLOSURES ABOVE. WITHOUT LIMITING SECTION 15 OF THE ACCOUNT AGREEMENT, ANY AND ALL CONTROVERSIES, DISPUTES OR CLAIMS BETWEEN YOU AND INTERACTIVE BROKERS, OR THE AGENTS, REPRESENTATIVES, EMPLOYEES, DIRECTORS, MEMBERS, MANAGERS, OFFICERS OR CONTROL PERSONS OF INTERACTIVE BROKERS (EXCLUDING FACEWALLET) ARISING OUT OF (i) ANY PROVISIONS OF OR THE VALIDITY OF THIS BROKERAGE AGREEMENT, OR (ii) ANY CONTROVERSY ARISING OUT OF INTERACTIVE BROKERS’S BUSINESS OR INTERACTIVE BROKERS’S CONDUCT WITH RESPECT TO THE ACCOUNTS, SHALL BE CONDUCTED PURSUANT TO THE APPLICABLE CODE OF ARBITRATION PROCEDURE OF THE FINANCIAL INDUSTRY REGULATORY AUTHORITY (“FINRA”), WHICH CAN BE FOUND HERE
(https://www.finra.org/arbitration-and-mediation/code-arbitration-procedure). ARBITRATION MUST BE COMMENCED BY SERVICE OF A WRITTEN DEMAND FOR ARBITRATION OR A WRITTEN NOTICE OF INTENTION TO ARBITRATE. THE DECISION AND AWARD OF THE ARBITRATOR(S) SHALL BE CONCLUSIVE AND BINDING UPON ALL PARTIES, AND ANY JUDGMENT UPON ANY AWARD RENDERED MAY BE ENTERED IN A COURT HAVING JURISDICTION THEREOF, AND NEITHER PARTY SHALL OPPOSE SUCH ENTRY.
No person shall bring a putative or certified class action to arbitration, nor 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 de-certified; 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.
You hereby represent and warrant to Interactive Brokers and agree with Interactive Brokers as follows:
16.1 Exchange or Broker Employee
Unless you have provided to us the consent referred to in Section 2 above, you are not an employee of any exchange, or of any corporation of which any exchange owns a majority of the capital stock, or of a member of any exchange, or of a member firm or member corporation registered on any exchange or of a bank, trust company, insurance company or of any corporation, firm or individual engaged in the business dealing either as broker or as principal in securities, bills of exchange, acceptances or other forms of commercial paper.
16.2 Compliance with Law
You shall comply with all applicable laws, rules and regulations in connection with your Account.
- You have the requisite legal capacity, authority and power to execute, deliver and perform your obligations under this Brokerage Agreement. This Brokerage Agreement has been duly authorized, executed and delivered by you and is your legal, valid and binding agreement, enforceable against you in accordance with
its terms. Your execution of this Brokerage Agreement and the performance of your obligations hereunder do not conflict with or violate any obligations by which you are bound, whether arising by contract, operation of law or otherwise. If you are an entity, the individual trustee, agent, representative or nominee (the “Client Representative”) executing this Brokerage Agreement on your behalf has the requisite legal capacity, authority and power to execute, deliver and perform such execution and the obligations under this Brokerage Agreement as applicable. Specifically, if you are a corporation, limited liability company, partnership, or other legal entity that is not an individual, the Client Representative signing this Brokerage Agreement on your behalf has been authorized to execute this Brokerage Agreement by appropriate corporate, member or manager, partnership or similar action, and if this Brokerage Agreement is entered into by a trustee or fiduciary, the trustee or fiduciary has authority to enter into this Brokerage Agreement on your behalf, you have the power and authority to enter into this Brokerage Agreement and that the services described herein are authorized under your applicable articles, certificate, charter, operating agreement, partnership agreement, plan document, trust or organizational, delegation or formation documents or law. You will deliver to Interactive Brokers evidence of your and Client Representative’s authority on Interactive Brokers’s request and will promptly notify Interactive Brokers of any change in such authority, including but not limited to an amendment to your organizational, delegation or formation documents that changes the information you provide to Interactive Brokers on opening an Account.
- If Client Representative is entering into this Agreement on your behalf, you and Client Representative understand and agree that the representations, warranties and agreements made herein are made by you both:
(a) with respect to you; and (b) with respect to the Client Representative.
- You are the owner or co-owner of all cash and Securities in the Account, no one except you has an interest in the Account or Accounts of yours with Interactive Brokers, and there are no restrictions on the pledge, hypothecation, transfer, sale or public distribution of such cash or Securities.
- You will provide Interactive Brokers as requested with complete and accurate information about your identity, background, net worth, investing timeframe, other risk considerations, any Securities from which you may be or become legally restricted from buying or selling, and other investment accounts, in your investment profile with FaceWallet and will promptly update that information as your circumstances change.
- You acknowledge that FaceWallet and Interactive Brokers are subject to certain anti-money laundering (“AML”) and related provisions under applicable laws, rules and regulations and are otherwise prohibited from engaging in transactions with, or providing services to, certain foreign countries, territories, entities and individuals, including without limitation, specially designated nationals, specially designated narcotics traffickers and other parties subject to United States government or United Nations sanctions and embargo programs (collectively “AML Laws”). In furtherance of the foregoing, you hereby represent and warrant the following and shall promptly notify FaceWallet or Interactive Brokers if any of the following ceases to be true and accurate: (a) to the best of the your knowledge based upon appropriate diligence and investigation, none of the cash or property that the you has paid or will pay or deposit to FaceWallet or Interactive Brokers has been or shall be derived from or related to any activity that is deemed criminal under United States law, nor will any of the your payments or deposits to FaceWallet or Interactive Brokers directly or indirectly contravene United States federal, state, international or other laws or regulations, including without limitation any AML Laws (b) no contribution or payment by you to FaceWallet or Interactive Brokers shall cause FaceWallet or Interactive Brokers to be in violation of any AML Laws. You understand and agrees that if at any time it is discovered that any of the representations in this Section 18.3(a)(v) are untrue or inaccurate, or if otherwise required by applicable law or regulation related to money laundering and similar activities, Interactive Brokers may undertake appropriate actions to ensure compliance with applicable law or regulation, including, but not limited to, freezing or forcing a withdrawal of your cash or assets from FaceWallet and Interactive Brokers.
- You acknowledge that FaceWallet or Interactive Brokers may require further documentation verifying your identity or the identity of the beneficial owners, if any, and the source of funds used to make payment or deposit to FaceWallet or Interactive Brokers. You hereby agree to
provide such documentation as may be requested by FaceWallet or Interactive Brokers. Furthermore, you acknowledge and agree that FaceWallet or Interactive Brokers may release confidential information regarding you and, if applicable, any of your beneficial owners, to government authorities if FaceWallet or Interactive Brokers, in their sole discretion, determines after consultation with counsel that releasing such information is in the best interest of FaceWallet or Interactive Brokers.
16.4 No Plan Assets
As the effective date of this Brokerage Agreement and at all times during the term of this Brokerage Agreement, none of the Account’s assets are or will be assets of “employee benefit plans” within the meaning of the Federal Employee Retirement Income Security Act of 1974, as amended.
17. Joint Accounts
If multiple persons are entering into this Brokerage Agreement on behalf of a joint account, each person understands and agrees that the representations, warranties and agreements made herein are made on behalf of each and all of the joint account holders and further agree that each (a) is a customer of Interactive Brokers pursuant hereto; (b) may deposit to, make withdrawals or transfers from, or issue stop payment orders with respect to the joint account without notice to or consent from any of the other owner(s) of the joint account (c) has the authority to act on behalf of the Account subject to FaceWallet’ exclusive investment discretion with respect to the Account, and FaceWallet and/or Interactive Brokers is entitled to rely upon and may accept such instructions from any one Client, which may be limited due to only one of the Clients having login privileges to the Account, without any requirement to seek confirmation of instructions from the other Client(s); (d) is jointly and severally liable per the terms of this Brokerage Agreement; and (e) that in the case of death of any of the joint account holders, interest in the entire Account shall vest in the surviving Account holder(s) under the same terms and conditions of this Brokerage Agreement and the surviving Account holder(s) shall promptly provide Interactive Brokers with written notice thereof and provide any documentation reasonably requested by Interactive Brokers in its management of the Account. Interactive Brokers may deliver securities or other property to, and send confirmations, notices, statements and communications of every kind, to any one of you, and such action shall be binding on each of you.
Each owner of a joint account is jointly and severally responsible and liable for the acts and omissions of each of the other owners of the joint account. Each owner of a joint account agrees to release us from all liability in connection with any instructions or payments we receive from any other owner of the joint account. In addition, all joint account holders as well as their successors, assigns, heirs and personal representatives will indemnify and hold harmless Interactive Brokers, FaceWallet and their affiliates, their agents, and their respective successors and assigns from any and all loss, damage or liability arising out of claims (i) related to actions or instructions given by an authorized joint account holder or (ii) incurred because any representation or warranty contained herein or in any other applicable ancillary document, is, at any time, not true and correct.
A joint account may be closed by any joint account owner. However, a joint owner may not remove any other joint account owner(s) from a joint account without an agreement signed by all of the owners of the joint account. If an owner of a joint account makes adverse claims or demands concerning the joint account, Interactive Brokers may, in its sole discretion, refuse to recognize such claims or refuse to take action until the rights of all interested parties have been resolved to our satisfaction and we are provided a copy of an agreement signed by all owners of the joint account.
All notices and communications under this Agreement
must be made through the Site or by email. Interactive
Brokers’s contact information for this purpose
is support@FaceWallet.io, and you contact information for this purpose
is contained in your user
account on the Site and the primary email address(es) in your Account
Application as you shall update from time to
19. Governing Law
This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of California applicable to contracts made and to be performed within the State of California as applied to contracts between California residents to be entered into and performed by California residents entirely within the State of California.
20. Severability and Amendment
The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any and all other provisions hereof. You acknowledge that Interactive Brokers may amend this Brokerage Agreement from time to time by notifying you by email or message to your Account, which amendment will be effective immediately.
21. Waiver or Modification.
Interactive Brokers’s waiver or modification of any condition or obligation hereunder shall not be construed as a waiver or modification of any other condition or obligation, nor shall Interactive Brokers’s waiver or modification granted on one occasion be construed as applying to any other occasion.
22. Entire Agreement
This Brokerage Agreement, together with the Account Agreement, is the entire agreement of the parties regarding the subject matter hereof and supersedes all prior or contemporaneous written or oral negotiations, correspondence, agreements and understandings (including without limitation any and all preexisting account agreements, which are hereby cancelled). However, the parties may choose to enter into separate agreements between them regarding different subject matters or investment programs.
23. No Third-Party Beneficiaries
Except with respect to FaceWallet’ rights pursuant to the Account Agreement, neither party intends for this Agreement to benefit any third party (other than FaceWallet) not expressly named in this Agreement.
24. Termination and Survival
This Agreement may be terminated by either party with or without cause by notice to the other party, which notice shall be provided by you to Interactive Brokers through the Site and by Interactive Brokers to you through the primary email address in your Account Application as you shall update from time to time. You may withdraw all or part of the Account(s) by notifying Interactive Brokers at any time, however certain partial withdrawals may result in termination of this Agreement. Client’s withdrawal of all of the Accounts under this Agreement will terminate this Agreement. Upon termination of this Agreement, Sections 6, 14, 15, 17, and 20 through 25 shall survive such termination. Client understands and agrees that FaceWallet may determine to liquidate immediately all holdings in the FaceWallet Account.
25. Market Data Not Guaranteed
agree that any market data or online reports are provided to you without
warranties of any kind, express or implied, including but not limited to, the
implied warranties of merchantability, fitness of a particular purpose or non-
infringement. You acknowledge that the information contained in any reports
provided by Interactive Brokers is obtained from sources believed to be
reliable but is not guaranteed as to its accuracy of completeness. Such
information could include technical or other inaccuracies, errors or omissions.
In no event shall Interactive Brokers or any of Interactive Brokers’s
affiliates be liable to you or any third party for the accuracy, timeliness, or
completeness of any information made available
to you or for any decision made or taken by you in reliance
upon such information. In no event shall Interactive Brokers or Interactive
Brokers’s affiliated entities be liable for any special incidental, indirect or
consequential damages whatsoever, including, without limitation, those resulting from loss of use, data or profits,
whether or not advised of the possibility of damages, and on any theory
of liability, arising out of or in connection with the use of any reports
provided by Interactive Brokers or with the delay or inability to use such reports.
26. Cash Sweep Program
We automatically transfer uninvested cash in your Account to a Designated Sweep Vehicle, as further described in this Section 26 (the “Cash Sweep Program”). We reserve the right to change both Cash Sweep Program options available and the general terms and conditions of the Cash Sweep Program, including sweeping uninvested cash in your Account to either a FDIC Insured Bank Sweep Option whose deposits are insured by the Federal Deposit Insurance Corporation or to a Money Market Fund Sweep Option. Except as otherwise noted in the Cash Sweep Program Disclosure Statement, which may be updated from time to time, Interactive Brokers may, with 30-days prior notice to you, change, add or delete products available through, or the terms and conditions of, the Cash Sweep Program. Further, we may, upon 30-days prior notice to you, change the Cash Sweep option in which you participate from one option to the other. Your continued use of your Cash Account following such change to the Cash Sweep Program and/or your Cash Sweep option shall constitute your consent to any such change.
By entering into this Brokerage Agreement, you affirmatively consent and authorize Interactive Brokers to: (i) sweep any available cash in your FaceWallet Account into a Money Market Fund Sweep Option in accordance with instructions from FaceWallet, and (ii) sweep any available cash in your Cash Account into a Designated Sweep Vehicle that had been designated by you. You further consent that notifications and disclosure concerning changes to the Cash Sweep Program will be made through updates to the Cash Sweep Program Disclosure Statement and/or the Brokerage Agreement. For more information regarding the Cash Sweep Program, please refer to the Cash Sweep Program Disclosure Statement.
26.2 Fund Sweep Option
You agree that your available cash in your Account(s) will be swept into the FaceWallet Fund pending investment of the cash or until otherwise needed to satisfy obligations arising in connection with your Account(s). Cash will be automatically invested in the FaceWallet Fund. Proceeds from the sale of Securities will be swept into the FaceWallet Fund following settlement if the Securities sold have been received in good deliverable form by the settlement date. The proceeds of any checks, wires or Automated Clearing House (“ACH”) transactions that you deposit to your Account(s) will be swept to the FaceWallet Fund by Wells Fargo and will begin earning dividends on that immediately following business day, or within 1 to 3 business days under certain circumstances. Access to such funds may be withheld for up to six Business Days to assure that such deposits have not been returned unpaid. You authorize FaceWallet to automatically redeem balances maintained in the Face Fund to satisfy your obligations. You authorize FaceWallet to act as your agent to purchase and redeem balances in the Face Fund, and further authorize FaceWallet to select and use agents as FaceWallet deems appropriate.
Acknowledgements. You acknowledge and agree that: Investments in the Face Fund are subject to restrictions described in the applicable Face Fund prospectus. For more complete information about the Face Fund, including charges and expenses, read the Face Fund’s prospectus carefully. An investment in the Face Fund is neither insured nor guaranteed by the FDIC.
Copyright © 2019 FaceWallet LLC and Interactive Brokers Inc – all rights reserved.