Series 7 Exam Prep 90, Customer Account Restrictions and Free Riding

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.

In this episode you will learn:

- Regulation T requires customers to pay for securities in a cash account within two business days of the settlement date.

- Freeriding is the prohibited practice of buying and then selling a security without ever depositing funds to pay for the initial purchase.

- The direct penalty for a freeriding violation is that the customer's account is frozen for a 90-day period.

- A "frozen" account means the customer can still trade, but must have sufficient settled cash in the account *before* placing any buy orders.

- How to distinguish freeriding from a restricted margin account, which relates to equity levels, not payment failures.

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