On the 8th you sold stock, this makes the proceeds of the sale a good credit balance in 3 business day,
The purchase of B was paid with proceeds of the sale of A.
I agree with "barney
"free riding" could only ocur if you sold Stock B and the proceeds of the sale of Stock A was not sufficient to cover the puchase of B.;
For "free riding" the settlement date of the sale of A does not really matter as long as the proceeds of A cover the purchase of B
The only problem can be is what is called the circumventing Reg T, but this is the brokerage firm problem and not yours, but this is NOT free riding
Assuming no other cash in your account, I believe your purchase of stock B constitutes free riding.
Your sale of stock A 4/8 settles T+3 on 4/11. You reinvested the proceeds a day earlier than settlement.
EDIT: I doubt that you would be asking unless your broker said it was free riding. Bet their explanation matches mine, despite contrary opinions by the "from the street" duo.
I have a cash account and the follow transactions took place in my account:
On Tuesday, April 8th, I sold Stock A. On Thursday, April 10th, I bought Stock B with proceeds from stock A.
Today (Monday), April 14th, I sold Stock B.
My understanding is that I could sell Stock B as long as my original transaction of Stock A settled (It settled Friday if I go by T + 3)
I just want to verify that I did not free-ride and that I am understanding this correctly.
Thank you!
