Blog

Home » What Are Blue Sky Laws?

What Are Blue Sky Laws?

Protecting the consumer from securities fraud is a key focus of the Securities and Exchange Commission on the federal level. There are agencies and numerous federal laws in place to help ensure the public is protected. Besides federal laws, there are also many state laws at work to guard consumers from securities fraud. These laws—also known as blue sky laws—play a key role in protecting the public.

But what are they exactly? And how do they work?

Each state has its own unique set of blue sky laws that regulate securities transactions. These laws also prevent fraudulent practices in the sale of securities. The law’s unique name is believed to have been coined in the early 20th century when a Kansas Supreme Court justice was speaking about protecting investors from “speculative schemes which have no more basis than so many feet of ‘blue sky.’” Federal law preempts most state law; however, where federal law is silent, these blue sky laws fill in the gaps to protect the public.

A blue sky law pressures issuers of securities. An issuer of securities includes anyone who issues stocks, options, or debt. These laws will look different depending on the state. New York’s laws for securities will be different from Pennsylvania’s. In fact, in New York, there is even an exemption from these laws focused on investing in theatrical productions.

If you are an issuer of securities, know the blue sky laws of the state you are operating in and the blue sky laws of the state into which you are selling or issuing securities.

Failing to comply with a blue sky law can have serious consequences, so it may be wise to consult with an experienced securities attorney in your state if you are planning to issue securities.

Contact Brinen & Associates

PRACTICE AREAS

RECENT POSTS

When Filing a Lawsuit What Court Should I Be In?

To file a lawsuit, you have two options. You can sue on the state level or you can sue in the federal court system. How do you know where your case belongs? And what are the advantages of each option? A person bringing a lawsuit only two ways to hear a case in federal...

read more

I Got a Summons and Complaint in the Mail? What Do I Do?

Receiving a summons and complaint in the mail may seem terrifying at first. For many people, their first instinct might be to just throw it in the trash and hope that their problem goes away. Hoping is not a plan, and is the last thing they should do. If you receive a...

read more

What is a 30(b)(6) Deposition?

Under the Federal Rule of Civil Procedure 30(b)(6), a party may depose – or ask questions of - public or private corporations, partnerships, associations, or other entities. To do this, the party needs to subpoena the public or private corporations, partnerships,...

read more

What To Do If You Haven’t Filed a Tax Return In Years

It may come as a surprise, but each year there are many, many Americans who simply do not file a tax return. Each person who does not file their tax return has many reasons this happens. For some, it could be because of physical or mental health issues that prevented...

read more

How to Handle a Subpoena From the SEC

Receiving a subpoena from the Securities and Exchange Commission (SEC) may seem daunting at first. If you do receive one, the first thing you should do is take a deep breath and not panic. You should assess your situation, and ultimately—and calmly—proceed with the...

read more