freeriding investment & finance definition
An action taken by a syndicate member to withhold a portion of a new security issue from sale because of a belief that a later reselling of the withheld security will yield a higher price.
Freeriding and withholding: Failure of a member firm to make a bona fide public distribution of a hot issue. Such an issue may not be purchased by any broker/dealer or his employees or families, except under certain conditions.
Freeriding
1: A situation that occurs when a member of an underwriting syndicate withholds a portion of a public offering of a new securities issue with the intent to sell it at a price higher than the initial offering price.
Freeriding
This trading violation is the result of buying a security in your Cash Account and then selling the same security without making separate payment on the full purchase price by Settlement Date.
Freeriding is Prohibited Freeriding is when you buy a security low and sell it high, during the same trading day, but use the proceeds of its sale to pay for the original purchase of the security.
Free riding (also known as Freeriding or Free-riding) is a term used in the stock-trading world to describe the practice of buying shares or other securities without actually having the capital to cover the trade.
If you buy and sell a stock before paying for it, you are freeriding, which violates the credit extension provisions of the Federal Reserve Board. If you freeride, your broker must "freeze" your account for 90 days.
Other rules include a prohibition of freeriding; that is, putting in an order to buy stocks without paying initially, and then selling them and using part of the proceeds to make the original payment.
 See also: Market, Stock, Trading, Security, Cash
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