Free-riding

(redirected from Free riding)
Also found in: Dictionary, Wikipedia.

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.
Mentioned in ?
References in periodicals archive ?
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.
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.
"Information transmission about giving opportunities is undermined by 'free riding' incentives - I count on other neighbours to convey information and so save on the effort of doing it myself," she added.
* Over time, consumers and manufacturers have increased their use of multiple channels of distribution resulting in conditions favorable to the occurrence of free riding.
* The differing viewpoints toward multiple channels of distribution yield different manufacturer strategies for managing multi-channel systems, including those that discourage free riding behavior as well as those that encourage it.
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.
While the Internet may increase the occurrence of free riding for some products, it may also reduce it for others.
Previous analysis of free riding has been extensive but largely theoretical.