Timeline for Is it free riding if you buy and sell the same stock on the same day
Current License: CC BY-SA 4.0
8 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Aug 24, 2019 at 0:13 | vote | accept | Qian | ||
| Aug 23, 2019 at 12:42 | comment | added | Bob Baerker | "If an investor buys and sells a security before paying for it, the investor is free riding”. It's a bit of semantics but think that the SEC wording is misleading. Free riding amounts to selling a stock that you don’t officially own. The problem is that the stock purchase wasn't paid for with unsettled funds. That's the original sin. | |
| Aug 20, 2019 at 13:45 | comment | added | Hart CO | @mootmoot Very true, at the minimum you can expect that they follow federal and state regulations, and certainly they'll have devices other policies to protect themselves as needed. | |
| Aug 20, 2019 at 7:47 | comment | added | mootmoot | Bear in mind that, OP question can be irrelevant according to individual brokers policies and regulation. That means OP can't even initial the purchase in the first place. Please edit your question to point out the logic issue. | |
| Aug 19, 2019 at 17:27 | comment | added | Hart CO | Any feedback to accompany downvote? Would love to make the answer better if you feel it is lacking. | |
| Aug 19, 2019 at 14:08 | comment | added | Hart CO | @prl From all I've read, it's not about paying prior to settlement, but prior to selling. Using unsettled funds to purchase would be a good faith violation which carries a lesser punishment than free riding violations. | |
| Aug 19, 2019 at 6:48 | comment | added | prl | Suppose that after buying and selling as in the question, the investor deposits $1000 (the purchase price) with the broker the next day (before the purchase settles). Then would he be okay (not in violation)? This question is based on the first paragraph of @farnsy’s answer, which says that the actual violation is using the unsettled funds from the sale to settle the purchase. Of course your quote contradicts that, but I wonder if it is a simplification of the actual regulation. | |
| Aug 18, 2019 at 14:52 | history | answered | Hart CO | CC BY-SA 4.0 |