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Frozen Account Meaning & Definition

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Definition of Frozen Account

Frozen Account is an account where the owner is required to deposit cash or securities up front, prior to any purchase or sale taking place. An account is usually frozen as a result of a customer’s failure to pay or deliver securities.

Applying "Frozen Account" to Securities Exams:

A customer who fails to pay for a securities purchase will have those securities sold out and the account will be frozen for 90 days. A frozen account is one in which no credit may be extended for securities purchases and any order that the customer wishes to execute to purchase securities must have the cash in the account to cover the value of the purchase.

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