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 ?
In more recent times, the problems wrought by these blue sky laws have been ameliorated, at least to an extent, by some federal preemption of state authority over registration.
Part II explains the current role of blue sky laws in regard to capital-formation regulation.
(8) By the time Congress passed the federal Securities Act of 1933 (the 1933 Act), forty-seven of the forty-eight states as well as the then-territory of Hawaii had adopted blue sky laws. (9)
The TSA, like other states' Blue Sky laws, provides for secondary liability for both intentional and reckless conduct.
Astarita, Introduction to the Blue Sky Laws, SECLAW.COM, ("While the SEC directly, and through its oversight of the NASD and the various Exchanges, is the main enforcer of the nation's securities laws, each individual state has its own securities laws and rules.
(133) Grossbard and the class brought claims for negligence, violations of the Nebraska Blue Sky law, negligent misrepresentation, and fraudulent misrepresentation.
Although every state has its own securities laws, commonly known as "blue sky laws," the Uniform Securities Act served as the model in 36 states and the District of Columbia.
Effective lobbying, principally by the Investment Bankers Association (IBA), had riddled most state blue sky laws with exemptions.(119)
After Congress enacted federal securities laws, primarily in 1933 and 1934, the intriguing question is why did the blue sky laws endure?
The SEC legislation specifically preserved the blue sky laws. Far from preempting a field when interstate commerce is involved, Congress in this case affirmatively yielded to local regulation by inserting a number of intrastate exemptions even when the malls or facilities of interstate commerce are used(123) and more broadly adopted provisions generally "preserving the jurisdiction of the state securities commissions."(124)
Before they even begin to describe the federal securities laws, the authors devote over one hundred pages to tracing the history of the Blue Sky laws and analyzing their provisions (pp.
The Notes and the related guarantees have not been registered under the Securities Act, or the securities laws of any state or other jurisdiction, and may not be offered or sold in the United States without registration or an applicable exemption from the Securities Act and applicable state securities or blue sky laws and foreign securities laws.