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:
“Perhaps nothing in all my business has helped me more than faith in my fellow man. From the very first I felt confident that I could trust the great, friendly public. So I told it quite simply what I thought, what I felt, what I was trying to do. And the response was quick, sure, and immediate.”
—Alice Foote MacDougall (1867–1945)
“Let those who desire a secure homeland conquer it. Let those who do not conquer it live under the whip and in exile, watched over like wild animals, cast from one country to another, concealing the death of their souls with a beggar’s smile from the scorn of free men.”
—José Martí (1853–1895)
“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)