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:
“It is easy—terribly easy—to shake a man’s faith in himself. To take advantage of that to break a man’s spirit is devil’s work.”
—George Bernard Shaw (1856–1950)
“I believe that the members of my family must be as free from suspicion as from actual crime.”
—Julius Caesar [Gaius Julius Caesar] (100–44 B.C.)
“They’ll stone you when you’re riding in your car.
They’ll stone you when you’re playing your guitar.
Yes, but I would not feel so all alone,
Everybody must get stoned.”
—Bob Dylan [Robert Allen Zimmerman] (b. 1941)