Good Faith Violation Example -GFV Call

Here is an example of a Good Faith Violation:



An account sold 100 shares of Apple and bought 200 shares of Westar on 5/26/16. Before the Sell of 100 shares of Apple settled, the account holder sold the 200 shares of Westar on 5/31, therefore creating a GFV on 5/31/16. If customer waited until settlement of 6/1 to process the sell of Westar, then they wouldn’t have a GFV.

A Good Faith Violation (GFV) occurs when an account has liquidated securities that were bought on unsettled proceeds in Type 1. Or, in other words, selling a position that was purchased with unsettled funds before the sale that originally generated the proceeds (used to make the purchase) settles, will result in a GFV.