Good Faith and Free Riding
The main difference between a good faith violation and free riding is the eventual deposit of funds to cover the buy. In free riding the buyer sells the security without ever depositing the funds to pay for the initial purchase.
The Federal Reserve considers a good faith violation an "abuse of credit" and requires the broker keep track of them. If the trader gets three violations in one year, the broker is required to restrict the account. This is compared to the free riding violation which results in an automatic restriction.
Read more about this topic: Free Riding
Famous quotes containing the words faith, free and/or riding:
“The Americans have many virtues, but they have not Faith and Hope. I know no two words whose meaning is more lost sight of.”
—Ralph Waldo Emerson (1803–1882)
““Under an accumulation of staggerers, no man can be considered a free agent. No man knocks himself down; if his destiny knocks him down, his destiny must pick him up again.””
—Charles Dickens (1812–1870)
“Deep with the first dead lies London’s daughter,
Robed in the long friends,
The grains beyond age, the dark veins of her mother,
Secret by the unmourning water
Of the riding Thames.
After the first death, there is no other.”
—Dylan Thomas (1914–1953)