Singapore’s Monetary Authority (MAS) has temporarily suspended a security token offering (STO) citing a “regulatory breach” committed by the issuer’s legal advisors.

This one is just begging for a lawyer joke…

According to the announcement, which was published on the agency’s website earlier Thursday, the STO issuer cannot proceed with its offering until it can “fully comply with regulatory requirements under the Securities and Futures Act (SFA).”

Under the act, an issuer can offer securities (or security tokens) to accredited investors without registering a prospectus with the MAS, however, this exemption requires that the issuer complies with certain conditions, one of which is a ban on advertising.

MAS Assistant Managing Director (Capital Markets), Lee Boon Ngiap, clarified:

Where an offer is made to the public, a prospectus is required to ensure that investors are provided with all the information to make informed investment decisions. Some offers may be made without a prospectus if they are limited to a restricted group of persons or to those who have the means to look after their own interests. Such offers are subject to strict conditions such as advertising restrictions. MAS will not hesitate to act if issuers contravene the disclosure requirements under the SFA.

Ignorantia Juris Non Excusat (Ignorance of the Law Excuses Not)

The MAS notes that the issuer of this particular STO, who has yet to be named, intended to take advantage of the prospectus exemption, however, it failed to fully comply with the conditions of the exemption when – of all people – its legal advisors publicly promoted the offering on Linkedin.

On August 1, 2017, the MAS published guidelines regarding digital token offerings which details how such offerings are subject to Singapore’s securities laws. The guide was updated in November of last year to provide additional clarity.

And now for that lawyer joke…

Q: Why does the bar association prohibit sex between lawyers and their clients? A: To prevent clients from being billed twice for essentially the same service.

Was the MAS right to suspend this STO? Sound off in the comments below.

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