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Referring to research done to ensure that a new issue of a security complies with applicable laws in the state in which it is issued. It especially refers to laws protecting investors from securities fraud. The term became popular when U.S. Supreme Court Justice Joseph McKenna wrote in Hall vs. Geiger-Jones Company (1917) that he wished to protect investors from securities with "no more basis than so many feet of 'blue sky.'" See also: Due Diligence.
Used to refer to the determination of whether a new issue of securities meets the requirements for distribution in the various states where the issue will be sold.