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A forbidden practice in which the member of an underwriting syndicate retains a portion of an initial public offering (IPO) and resells the securities at a higher price determined by the market at a later time.

Also forbidden is a brokerage customer's rapid buying and selling of a security without putting up money for the purchase.


1. The practice of buying a security and then selling it without having enough cash or cash-equivalent to pay for the original purchase. In the United States, transactions do not settle for three days; that is, a buyer does not pay for a security until three days after he/she buys it. If the buyer does not have the cash to pay for the purchase, he/she may theoretically sell the security on the same day and use that money to pay for the purchase. Free-riding is illegal under SEC rules and is prohibited by the Financial Industry Regulatory Authority.

2. An illegal practice in which an underwriter does not place a new issue of a security and then later sells it for a higher price.
References in periodicals archive ?
The announcement comes on the heels of the year-long extension of "Operation Personal Freedom: Ride Free," free Riding Academy motorcycle training to all current and former U.
Harley Davidson Incorporated (NYSE: HOG), a Wisconsin-based motorcycle manufacturer, is launching a free riding course for all current and former United States military personnel.
In this case, the ACCC accepts that there is a market failure caused by the free riding of some Festool retailers.
The ACCC considers that resale price maintenance is likely to limit free riding by encouraging Festool retailers to offer better services to attract customers.
An alternative source of free riding does not involve the private sector, but is between government activities, particularly those with significant spillover effects.
A recent theoretical paper by Choi and Gerlach (2012) raises the concern that national antitrust enforcement in a global economy (with multi-market contact among exporters) may be suboptimal due to free riding on the antitrust activity of other countries.
In the following we explore the role of free riding by states in this area.
Along with today's announcement of free Riding Academy training for all current and former U.
Harley Davidson Incorporated (NYSE: HOG), a Wisconsin-based motorcycle manufacturer, is offering all current and former United States military operatives free Riding Academy motorcycle training.
Previous analysis of free riding has been extensive but largely theoretical.
The theoretical model used to explain free riding is abstracted from the standard model of the demand for and supply of union membership that Moore and Newman |1985~ describe in detail.
Thus by controlling for age and other characteristics which reflect the costs and benefits of membership to individuals, we can more accurately measure the extent to which right-to-work laws, by removing the constraints on demand for membership imposed by union shops, affect free riding.