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.
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Famous quotes containing the words free, riding and/or violation:
“For all the injustices in our past and our present, we have to believe that in the free exchange of ideas, justice will prevail over injustice, tolerance over intolerance and progress over reaction.”
—Hillary Rodham Clinton (b. 1947)
“With its frame of shaking curls all in disarray,
earrings swinging,
make-up smudged by beads of sweat,
eyes languid at the end of lovemaking,
may the face of the slim girl
who’s riding on top of you
protect you long.
What’s the use
of Vi.s».n»u, iva, Skanda,
and all those other gods?”
—Amaru (c. seventh century A.D.)
“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)