DriveWealth, LLC has agreed to pay a fine of $100,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

In June 2020, DriveWealth entered into an omnibus clearing arrangement with one of its clearing firms. Under the clearing agreement, DriveWealth and the clearing firm agreed that the clearing firm would handle the transfer of customer accounts on DriveWealth’s behalf through the Automated Customer Account Transfer Service (ACATS) because DriveWealth was itself not eligible to do so.

However, because it cleared for DriveWealth on an omnibus basis, the clearing firm did not know the identity of the customers, or the securities positions and money balances in the customers’ accounts. DriveWealth and the clearing firm therefore agreed on a process and deadlines for DriveWealth to provide the necessary information regarding DriveWealth’s customer transfer requests.

Although DriveWealth and the clearing firm improved their process for providing necessary information over time, from June 2020 through October 2022, DriveWealth did not expedite 1,206 outgoing full transfer requests, which caused the ACATS system to purge those requests.

In October 2022, DriveWealth terminated its agreement with the clearing firm and began timely processing its own ACATS requests.

By failing to take timely action on customer transfer requests, DriveWealth violated FINRA Rules 11870(a) and 2010.

On top of the $100,000 fine, the firm has agreed to a censure.

DriveWealth has been a FINRA member since December 2013. The firm is headquartered in New York, New York, employs approximately 60 registered representatives, and has one branch office. DriveWealth provides brokerage services to correspondent broker-dealers and investment advisors to trade equity securities and exchange-traded funds.