FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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(Print or Type Responses)

1. Name and Address of Reporting Person * Rallo James M   2. Issuer Name and Ticker or Trading Symbol LIQUIDITY SERVICES INC [LQDT] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) _____ Director _____ 10% Owner __X__ Officer (give title below) _____ Other (specify below) CFO, Treasurer (Last) (First) (Middle) C/O LIQUIDITY SERVICES, INC., 1920 L STREET, N.W., 6TH FLOOR 3. Date of Earliest Transaction (Month/Day/Year) 10/12/2010 (Street) WASHINGTON, DC 20036 4. If Amendment, Date Original Filed(Month/Day/Year) 6. Individual or Joint/Group Filing(Check Applicable Line) _X_ Form filed by One Reporting Person ___ Form filed by More than One Reporting Person (City) (State) (Zip) Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned

1.Title of Security (Instr. 3) 2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common Stock 10/12/2010   M   25,000 A $ 7 29,000 D   Common Stock 10/12/2010   S(1)   25,000 D $ 16.05 4,000 D   Common Stock 10/13/2010   M   25,000 A $ 7 29,000 D   Common Stock 10/13/2010   S(1)   25,000 D $ 16.24 4,000 D   Common Stock 10/14/2010   M   6,124 A $ 7 10,124 D   Common Stock 10/14/2010   M   18,876 A $ 7.48 29,000 D   Common Stock 10/14/2010   S(1)   25,000 D $ 16.74 4,000 D

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Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)

1. Title of Derivative Security (Instr. 3)

2. Conversion or Exercise Price of Derivative Security

3. Transaction Date (Month/Day/Year)

3A. Deemed Execution Date, if any (Month/Day/Year)

4. Transaction Code (Instr. 8)

5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5)

6. Date Exercisable and Expiration Date (Month/Day/Year)

7. Title and Amount of Underlying Securities (Instr. 3 and 4)

8. Price of Derivative Security (Instr. 5)

9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)

10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4)

11. Nature of Indirect Beneficial Ownership (Instr. 4)

Code

V

(A)

(D)

Date Exercisable

Expiration Date

Title

Amount or Number of Shares

Employee Stock Option

$ 7

10/12/2010

M

25,000

(2)

10/28/2015

Common Stock

56,124

$ 7

31,124

D

Employee Stock Option

$ 7

10/13/2010

M

25,000

(2)

10/28/2015

Common Stock

31,124

$ 7

6,124

D

Employee Stock Option

$ 7

10/14/2010

M

6,124

(2)

10/28/2015

Common Stock

6,124

$ 7

0

D

Employee Stock Option

$ 12.89

(3)

03/30/2016

Common Stock

16,876

16,876

D

Employee Stock Option

$ 10.93

(4)

10/01/2017

Common Stock

70,000

70,000

D

Employee Stock Option

$ 7.48

10/14/2010

M

18,876

(5)

10/01/2018

Common Stock

140,000

$ 7.48

121,124

D

Reporting Owners

Reporting Owner Name / Address	Relationships
	Director	10% Owner	Officer	Other
Rallo James M C/O LIQUIDITY SERVICES, INC. 1920 L STREET, N.W., 6TH FLOOR WASHINGTON, DC 20036			CFO, Treasurer

Signatures

/s/ James E. Williams, by power of attorney		10/14/2010
**Signature of Reporting Person		Date

Explanation of Responses:

*	If the form is filed by more than one reporting person, see Instruction 4(b)(v).
**	Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1)	The transactions reported in this Form 4 were effected pursuant to a Rule 10b5-1 trading plan adopted by the reporting person on September 13, 2010.
(2)	On October 28, 2005, the reporting person was granted an option to purchase 75,000 shares of common stock. On February 28, 2006, the option vested as to 10% (7,500 shares) upon the completion of the Company's initial public offering; the remaining 90% (67,500 shares) vested upon delivery of the Company's independent accountants of an unqualified opinion on management's assessment of the Company's internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.
(3)	These options became fully vested on March 30, 2010.
(4)	Twenty-five percent of this option grant vested on October 1, 2008 and thereafter 1/48th of the option grant will vest each month for thirty-six months.
(5)	Twenty percent of this option grant vested on October 1, 2009 and thereafter 1/60th of the option grant will vest each month for forty-eight months.

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