Margin Accounts
Under Regulation T, when is a 90-day freeze imposed on a customer's cash account?
Freeriding occurs when a customer buys securities in a cash account, sells them before paying for them, and uses the sale proceeds to pay for the original purchase. This violates Regulation T and results in a 90-day free
Complete Analysis & Legal Rationale
Freeriding occurs when a customer buys securities in a cash account, sells them before paying for them, and uses the sale proceeds to pay for the original purchase. This violates Regulation T and results in a 90-day freeze requiring the customer to have cash in the account before placing trades.
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 concept in the explanation.
Does not match the governing concept in the explanation.
Does not match the governing concept in the explanation.
Matches the verified teaching point in the explanation.
Official Standard: Primary source referenced in the explanation (Regulation T). Verify before launch.