Free Riding Violation
The Securities and Exchange Commission states "In a cash account, you must pay for the purchase of a stock before you can sell it. If you buy and sell a stock before paying for it, you are free riding, which violates the credit extension provisions of the Federal Reserve Board. If you free ride, your broker must freeze your account for 90 days."
If someone is trading rapidly and using all the cash available in the account to buy and sell, that person will likely get a "freeriding violation." Freeriding is subject to a mandatory 90-day cash-up-front restriction. Clients can still trade, but they lose the ability to make purchases with unsettled sale proceeds.
Read more about this topic: Free Riding
Famous quotes containing the words free, riding and/or violation:
“Women born at the turn of the century have been conditioned not to speak openly of their wedding nights. Of other nights in bed with other men they speak not at all. Today a woman having bedded with a great general feels free to tell us that in bed the general could not present arms. Women of my generation would have spared the great general the revelation of this failure.”
—Jessamyn West (1907–1984)
“Oh he
Comes designed to my love to steal not her tide raking
Wound, nor her riding high, nor her eyes, nor kindled hair,
But her faith....”
—Dylan Thomas (1914–1953)
“Every violation of truth is not only a sort of suicide in the liar, but is a stab at the health of human society.”
—Ralph Waldo Emerson (1803–1882)