blue sky laws

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Blue Sky Laws

Laws requiring research and transparency to ensure that a new issue of a security complies with applicable laws in the state in which they are 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.

blue sky laws

State regulations that cover the offering and sale of securities within state boundaries. Although the laws differ among states, most include provisions relating to fraudulent activities and the licensing of individuals who sell securities. The term derives from an effort to protect investors from unwittingly buying a piece of "blue sky."

Blue sky laws.

Blue sky laws require companies that sell stock, mutual funds, and other financial products to register new issues with the appropriate public agency.

The companies must also provide financial details of each offering in writing so that investors have the information they need to make informed buy and sell decisions.

These laws are state rather than federal laws, and owe their origin -- at least in legend -- to a frustrated judge who equated the value of a worthless stock offering to a patch of blue sky.

References in periodicals archive ?
These private and governmental state sanctions, therefore, amount to a significant role for blue sky laws.
That is because prior to the effective date of NSMIA, most blue sky laws had an exemption from state registration for offerings by these companies.
As a result, although the scope of state authority has to some degree been constricted by preemption, blue sky laws continue to play a significant role in capital formation with regard to registration obligations.
Under the proposal, the federal exemption under Rule 147 requires the offering to either be registered under the state's blue sky laws or meet the requirements for the particular state's crowdfunding exemption from registration.
Although progress has been slow and somewhat messy, today's blue sky laws are considerably more efficient than in prior periods.
Blue sky laws that prohibit fraud, deception, or manipulative conduct in connection with the sale of securities make economic sense, particularly when backed up by administrative and criminal sanctions and private rights of recovery.
Blue sky laws granting states authority over registration were, prior to NSMIA, impossible to justify as promoting an economically efficient allocation of capital.
In such a case the business that was seeking capital would likely have been subject to the separate and individual registration requirements of each of the fifty-plus jurisdictions that had blue sky laws.
twenty-three states had adopted blue sky laws, and that "[a]ll but six of [those] acts were either identical with the Kansas statute or modeled upon it").
Guam, Puerto Rico, and the Virgin Islands have blue sky laws in force.
Blue Sky Laws and the Recent Congressional Preemption Failure, 22 J.