Liquifi’s Post

Avoid needless compliance/legal headaches by clearly setting expectations for off-ramping tokens. Here's how (3 steps) 👇 1️⃣ Set clear insider trading rules Always be clear with your employees/investors/stakeholders here. Failure to do so can significantly erode trust in your team/project. 2️⃣ Communicate selling windows Clearly communicate when your stakeholders will be allowed to sell (and when they won't). Communicate this information well ahead of predetermined selling windows. 3️⃣ Establish a detailed, documented process for selling insider tokens Implementing something similar to a Rule 10b5-1 trading plan (often referred to as a 10b5-1 plan) is a great way to establish rules and processes that protect against insider trading violations (more details on this in the comments). Additionally, consult your legal counsel/tax firm about working with a market maker or an over-the-counter (OTC) trading desk. Executing the bulk sale of tokens (especially during large unlock events) often requires coordination with one of these two entities. More on OTCs... In essence, they act like matchmakers between buyers + sellers, allowing them to finalize a price for a high-volume txn. Importantly, they do so without revealing the details of the trade to public. 2 types of OTC desks exist: (1) Principal desks — use their funds to fulfill the buyer's order at an agreed price (they take on the default risk themselves). (2) Agency desks — broker deals on the buyer's behalf, without using their funds. They charge a fee. Why they matter: OTC desks play the role of enabling early project adopters, whales, or institutions the option to buy/sell large amounts of a token without impacting the market price. Working with OTCs can be a great way to manage the visibility/privacy of large sales txns, in order to reduce impact on public liquidity (ex: DEX liquidity pools). As always, reach out with any questions on how to manage the off-ramping process — our team would love to help build your program with our Custody & OTC partners.

One of the quickest ways to find yourself dealing with compliance/legal problems post-launch? Forgetting to set up the right processes + systems for off-ramping tokens. Robin Ji does a great job breaking down 3 strategic guidelines here 👇

Broker-Dealer and Investment Adviser Alert – SEC Is On The Hunt For Anti-Whistleblower Provisions In Client And Representative Agreements. The SEC has repeatedly warned firms to avoid clauses that stifle whistleblower speech in client and financial advisor agreements. Most recently, the SEC sanctioned a New Jersey broker-dealer and 2 affiliated investment advisory firms for having some clients sign confidentiality agreements that impeded the clients’ ability to communicate with the SEC about possible securities law violations. The Order requires the firms to pay a total of $240,000 in civil penalties and to cease and desist from further violations. Best Practices – Firms should review their client and FA agreements to make sure that they do not limit whistleblower speech in any way. Moreover, firms should have a provision that states that clients are in no way restricted from voluntarily contacting the Staff or other regulators about potential securities law violations. Failure to do so can leave a regulatory mark on the firm’s record. The SEC’s Order can be found here: https://lnkd.in/eXErb6uh Blog Link: https://lnkd.in/enracGDE

Learn from the SEC action against an ETF manager for conflict of interest and disclosure failures! Even if you don't manage ETFs, this case highlights key compliance lessons on transparency and conflicts of interest. Need help with procedures or disclosures? Contact us today! https://wix.to/ayAZ3B8 #RIA #FinancialAdvisors #RegisteredInvestmentAdvisor #SECcompliance #Advisor #regulation #compliance #investmentmanagement #wealthmanagement #regulatoryeducation #compliancereview #annualreview #conflictsofinterest

Learn from the SEC action against an ETF manager for conflict of interest and disclosure failures! Even if you don't manage ETFs, this case highlights key compliance lessons on transparency and conflicts of interest. Need help with procedures or disclosures? Contact us today! https://wix.to/rluhsEf #RIA #FinancialAdvisors #RegisteredInvestmentAdvisor #SECcompliance #Advisor #regulation #compliance #investmentmanagement #wealthmanagement #regulatoryeducation #compliancereview #annualreview #conflictsofinterest

Learn from the SEC action against an ETF manager for conflict of interest and disclosure failures! Even if you don't manage ETFs, this case highlights key compliance lessons on transparency and conflicts of interest. Need help with procedures or disclosures? Contact us today! https://wix.to/eJ39MD0 #RIA #FinancialAdvisors #RegisteredInvestmentAdvisor #SECcompliance #Advisor #regulation #compliance #investmentmanagement #wealthmanagement #regulatoryeducation #compliancereview #annualreview #conflictsofinterest

Much appreciation to GRIP: Global Rely, for this flattering profile. By the way, if you haven't checked out GRIP yet, be sure to do so. It is a great resource for compliance and regulatory reporting. (And I'm not just saying that). #cryptoregulation #esgcompliance #cryptocompliance #compliance

In some cases, the Custodian and Trustee can be the same entity. This is known as a "combined" or "integrated" custodian/trustee model. In this arrangement, a single entity performs both roles: 1. Holds legal title to the assets (Trustee) 2. Holds physical possession of the assets (Custodian) This combined role can simplify operations, reduce costs, and increase efficiency. However, it also concentrates responsibilities in a single entity, which can increase risk if not properly managed. Some benefits of a combined Custodian/Trustee include: 1. Streamlined operations 2. Reduced administrative costs 3. Enhanced control and oversight 4. Simplified reporting and compliance However, it's essential to ensure that the combined entity: 1. Maintains clear separation of duties internally 2. Implements robust controls and safeguards 3. Complies with relevant regulations and laws Examples of entities that may serve as both Custodian and Trustee include: 1. Banks 2. Trust companies 3. Investment firms 4. Specialized custodial services It's crucial to note that not all jurisdictions or regulatory frameworks permit a combined Custodian/Trustee role.

Why is the executing broker MPID required on the SIA Form One Schedule A? The requirement for an executing broker's MPID (Market Participant Identifier) on the SIA (Securities Industry Association) Form One, Schedule A (F1SA) primarily revolves around regulatory compliance, transparency, and the efficient monitoring of trading activities within financial markets. Here's why the MPID is necessary; 1. Regulatory Compliance: Financial markets are heavily regulated to ensure fairness, transparency, and stability. The MPID serves as a unique identifier for each brokerage firm or market participant, allowing regulatory bodies like the SEC (Securities and Exchange Commission) in the United States to efficiently oversee and enforce regulations. By including the executing broker's MPID on transactions, firms demonstrate compliance with these regulatory requirements. 2. Transparency and Accountability: The inclusion of the MPID on the F1SA facilitates transparency in trading activities. It enables regulators and other market participants to easily identify the executing broker for each trade, fostering accountability and deterrence of fraudulent or manipulative trading practices. 3. Trade and Transaction Reporting: The MPID is crucial for accurate trade and transaction reporting. It helps in the aggregation, analysis, and dissemination of trading data, which is essential for market surveillance and the maintenance of a fair and orderly market. This data can be used to detect trends, potential market abuses, or systemic risks. 4. Operational Efficiency: From an operational perspective, the MPID standardizes the identification process for executing brokers across different platforms and transactions. This standardization improves the efficiency of trade processing, clearing, and settlement by reducing the potential for errors and mismatches in transaction records. 5. Market Surveillance and Analysis: Regulators and exchanges use the MPID to monitor trading activity and conduct market analysis. By tracking the activities associated with each MPID, they can identify abnormal trading patterns that may indicate market manipulation, insider trading, or other forms of misconduct. In summary, the executing broker's MPID on F1SA plays a critical role in ensuring regulatory compliance, enhancing market transparency, facilitating accurate reporting, improving operational efficiency, and supporting effective market surveillance. This requirement reflects the broader efforts within the financial services industry to maintain the integrity and trustworthiness of the markets. Later this week, we will discuss what could happen to a Prime Broker who does not use the MPID in their SIA agreements.