free-riding

free-riding definition - finance
Selling a stock before it has been paid for, which violates the credit extension provisions of the Federal Reserve Board. If an investor free-rides, the broker is required to freeze the account for 90 days. This means that while trades can still be made, they must be paid for in full on the day the purchase is made, not three days later, as is typically allowed.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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