Free-riding

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Free-riding

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.

Free-Riding

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.
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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.
Free riding and Antitrust, a love and hate relationship (3).
Over time, consumers and manufacturers have increased their use of multiple channels of distribution resulting in conditions favorable to the occurrence of free riding.
Klein and Murphy further believe that it is only free riders who discount the dealer price of the product who incriminate themselves--all other forms of free riding go unnoticed and unpunished.
Auto Business News-May 19, 2015--Harley Davidson offers United States military operatives free Riding Academy motorcycle training
While the Internet may increase the occurrence of free riding for some products, it may also reduce it for others.
We have over 12 miles of trails in the Hansen Dam area and they're linked to more in the Angeles National Forest, but we don't have a lot of free riding space,'' Ward said.
The literature on union membership, however, makes it clear that such bivariate comparisons neglect other factors that could affect free riding.