Freeriding

Categories: Econ, Regulations

What happened when your cousin Melvin hot-wired that BMW last summer.

In the finance world, freeriding is also a big no-no. It  refers to buying stocks or other securities and then selling them—without paying for them in the first place. Freeriding also happens when an underwriter in a syndicate holds back some newly issued stocks and sells them later for a higher price.

Both activities are illegal. They'll land you in even more trouble than Melvin.

Find other enlightening terms in Shmoop Finance Genius Bar(f)