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:
“Great believers are always reckoned infidels, impracticable, fantastic, atheistic, and really men of no account. The spiritualist finds himself driven to express his faith by a series of skepticisms.”
—Ralph Waldo Emerson (1803–1882)
“Long live Free Quebec!
(Vive le Québec Libre!”
—Charles De Gaulle (1890–1970)
“Love-light of Spain—hurrah!
Death-light of Africa!
Don John of Austria
Is riding to the sea.”
—Gilbert Keith Chesterton (1874–1936)