Freeriding and Withholding

What is Freeriding and Withholding

Freeriding and Withholding is the withholding of a new issue of securities offered by a broker dealer for the benefit of the brokerage firm or an employee.

SecuritiesCE explains Freeriding and Withholding

When a new issue of securities comes to market and are in high demand the securities often trade at an immediate premium in the secondary market. This is known as a "hot issue". The broker dealer underwriting the issue must make a full and complete offering of the securities to the public and may not withhold the securities for its own account or for the account of its employees.