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I've been using a margin account but recently I opened a cash account. I was hit with a 90 day penalty on the cash account because I didn't wait 3 days for the sale of previous stocks to settle before purchasing new stocks.

My broker was kind enough to show me the SEC rules.

Anyone else encountered this problem?

Your broker was BSing you.

There is no SEC rule, for cash accounts, that says you can't buy stock with unsettled cash. The only thing the SEC prohibits is the following - you sell stock A in a cash account. You buy stock B with the unsettled cash. You sell stock B before the end of the settlement period.

There are several brokers around who have implemented the stricter rule you described. This is not due to the SEC rule. It's due to their incompetent account tracking which renders them unable to enforce the correct SEC rule. If you must trade in a cash account, such as an IRA, you would do well to steer clear of the sloppy brokers.

I routinely buy shares in my IRA account with unsettled cash. I do it every month. Never a problem.

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