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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.
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References in periodicals archive ?
Urban free-riding is the most progressive discipline in mountain biking and illustrates the changing trend of focus from open woodland areas into urban city centres.
As part of its European launch of the new 'urbanproof' crossover QASHQAI, Nissan announces the QASHQAI Urban Challenge - the first ever pan-European free-riding competition of its kind.
QASHQAI Urban Challenge is an urban free-riding competition where the world's best mountain bikers will compete in an urban environment to win 200,000 euros - the largest prize fund in this sport to date.
First Ever Pan-European Event Series in Free-Riding - Five Countries, Over Five Weekends, Five Disciplines
The company has punished 117 of its conductors and other staff for failing to exert control on free-riding passengers.
As a result of the constant measures that the BDZ EAD Holding is implementing in order to reduce to the minimum the free-riding, we have registered a decline in the number of free-riders," BDZ said.
Under the strong free-riding model, some of these interaction terms were statistically significant.
We do find some interesting differences in coefficient estimates between the weak and strong free-riding models.
Other cases, which may seem more costly and with more uncertain benefits, for example, vertical issues, monopolization, restrictive contracts, and so forth might be expected to lead to greater free-riding behavior.
In both models, the number of states participating in the litigation increases the free-riding behavior and the resources available to the state government, measured by both the state GSP and the relative size of the government sector, decreases both weak and strong free-riding behavior, as expected.