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:
“May it not be that, just as we have to have faith in Him, God has to have faith in us and, considering the history of the human race so far, may it not be that “faith” is even more difficult for Him than it is for us?”
—W.H. (Wystan Hugh)
“The real American type can never be a ballet dancer. The legs are too long, the body too supple and the spirit too free for this school of affected grace and toe walking.”
—Isadora Duncan (1878–1927)
“There can be no literary equivalent to truth.”
—Laura Riding (1901–1991)