Any money you transfer into your Flourish Cash account will be automatically deposited by us at bank accounts with our FDIC-member “Program Banks,” such as PNC Bank and HSBC Bank USA. That money will receive FDIC insurance coverage as if you had deposited that cash directly with those banks yourself,1 and you can withdraw your funds whenever you need it.2
So how is this possible?
While Stone Ridge Securities LLC, which holds your Flourish Cash account, is not a bank, FDIC regulations specify that cash deposited at a bank (like our Program Banks) by an agent (like Stone Ridge Securities LLC) on behalf of their customers (like you) will be insured as if the customers deposited the cash directly with the banks themselves, so long as certain requirements are met. This is frequently referred to in the industry as “pass through” FDIC insurance, as the insurance coverage “passes through” the agent or custodian to the customer. While this structure may appear new unless you work within the banking industry, many broker-dealers operate “cash sweep” programs that provide pass through FDIC insurance in the same manner, and there are hundreds of billions of dollars within these cash sweep programs today, including at large broker-dealers such as Charles Schwab and Fidelity.
Flourish Cash is designed to satisfy the requirements for FDIC pass-through insurance. We are merely acting as your agent: you are the owner of the deposits, your cash is placed in appropriately titled accounts at the Program Banks, and we keep the necessary records of your ownership.
Through Flourish Cash, you receive the benefit of a competitive rate for your cash while spreading your cash across multiple banks, while only opening one account and receiving just one monthly statement and one annual tax document.
For additional information regarding FDIC coverage, please visit https://fdic.gov/.
1 The cash balance in a Flourish Cash account that is swept to one or more Program Banks is eligible for FDIC insurance, subject to FDIC rules, including FDIC aggregate insurance coverage limits. FDIC insurance will not be provided until the funds arrive at the Program Bank. There are currently at least 6 Program Banks available to accept deposits for institutional Flourish Cash accounts (accounts for corporations, partnerships and other legal entities) and at least 8 Program Banks available to accept deposits for personal Flourish Cash accounts (individual, joint and revocable trust accounts), and we are not obligated to allocate customer funds across more than this number of Program Banks if there is a greater number of banks in the Program. Customers are generally eligible for FDIC insurance coverage of $250,000 per customer, per Program Bank, for each account ownership category. Thus, institutional customers are eligible for up to $1,500,000 of FDIC insurance and personal customers are eligible for (i) up to $2,000,000 of FDIC insurance for either (A) an individual account or (B) an account for a revocable living trust in which one person is the only grantor, trustee and beneficiary of the trust (“Individual Revocable Trust Account”) and (ii) up to $4,000,000 of FDIC insurance for either (A) a joint account with two owners or (B) an account for a revocable living trust in which the same two persons are each the only grantors, trustees and beneficiaries of the trust (“Joint Revocable Trust Account”). The total FDIC coverage for a two-person household is calculated assuming that each household member has an individual account and that both household members share a joint account. If the number of Program Banks decreases for a customer (either because a Program Bank is no longer participating in Flourish Cash, because a customer’s cash is not eligible to be swept to a Program Bank based on criteria set by the Program Bank (which will be disclosed at account opening), or because a customer opts out of having their cash swept to a particular Program Bank), the amount of FDIC insurance for which the customer would be eligible through Flourish Cash would be lower. Typically, all of a customer’s deposits at a Program Bank in the same ownership category (including deposits held outside Flourish Cash or held through multiple Flourish Cash accounts with the same ownership category) count toward the FDIC insurance limit for deposits at that Program Bank. Customers are responsible for monitoring whether they maintain deposits at a Program Bank outside of Flourish Cash and should consider opting out of having their cash swept to any such Program Bank to avoid exceeding FDIC insurance limits. Although Flourish Cash is offered through a brokerage account and cash held in brokerage accounts often has the benefit of SIPC protection, until such time as we offer securities products, customers likely will not have the benefit of SIPC protection for cash held in their Flourish Cash account. Further, SIPC protection is not available for any cash held at the Program Banks. For additional information regarding FDIC coverage, visit https://fdic.gov.
2 For withdrawal requests submitted by the applicable deadline, the funds will generally be transferred to the requested external account by the next business day, except for withdrawal requests submitted on the weekend or on a holiday, which should be completed by the second following business day, but in some circumstances, withdrawals may take longer to complete, as further described in your account agreement.