Account Types
A customer with a cash account purchases $8,000 of stock on Monday. On Tuesday, before settlement, the customer sells the stock for $8,500 without having deposited any funds. What violation has occurred?
This is a freeriding violation because the customer bought and sold securities without ever depositing funds to pay for the purchase. The customer profited from shares they never paid for. Freeriding results in an automa
Complete Analysis & Legal Rationale
This is a freeriding violation because the customer bought and sold securities without ever depositing funds to pay for the purchase. The customer profited from shares they never paid for. Freeriding results in an automatic 90-day account freeze under Regulation T.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Official Standard: Primary source referenced in the explanation (Regulation T). Verify current text before launch.