blue-sky laws

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Blue-sky laws

State laws covering the issue and trading of securities.

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

A popular name for state securities laws intended to protect investors and aid them in making informed buying decisions rather than taking the word of a smooth-talking salesperson who “promises the sky.”

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The statute's pre-emption of the state blue-sky laws was included based on the rationale that such registration requirements duplicated the requirements of the federal securities law.

Very little override action was taken prior to 1991, although four states took action to override the blue-sky law exemption in 1985 and 1986 (see Table 1).

An overriding concern

Viola's examination experience includes reviewing financial statements, performance advertising, disclosure documents, and investment adviser and hedge fund issues arising under ERISA and blue-sky laws.

Daniel G. Viola, Partner, Sadis & Goldberg LLP to Speak at the Knowledge Group's Event

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