Starting a Business
The term blue sky law refers to state regulations that are designed to protect investors against securities fraud. These laws require sellers of new issues to register their offerings and provide details regarding their finances. Blue sky laws allow investors to base all of their judgements on data that is trustworthy.
The name itself is said to have first come from a Supreme Court justice who, in the 1900s, claimed he was desirous of protecting investors from ventures that were speculative and had "as much value as a patch of blue sky."
Every state has its own individual set of laws regarding securities, all of which have similarities to those at the federal level. Many are even based on ederal laws such as the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940 and the Investment Advisers Act of 1940, according to Bart Mallon of Mallon P.C.
At the state level, blue sky laws are enforced by the state securities administrator, which is the state in question's enforcement agency. This agency acts in a similar way to how the SEC does at the government's federal level.
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