What are Blue Sky Laws?

Cite this article as: Jason Mance Gordon, "What are Blue Sky Laws?," in The Business Professor, updated July 26, 2016, last accessed April 8, 2020, https://thebusinessprofessor.com/knowledge-base/what-are-blue-sky-laws/.

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“Blue-sky laws” are state laws regulating the sale of securities within that state. These laws are so named from early laws passed in Kansas and in the Midwest to protect investors from undertaking investments that had no more substance than the blue sky. Issuers of securities must comply with these state laws as well as the previously discussed federal regulations. Blue-sky laws may allow for both civil and criminal penalties against violators. The requirements of state blue-sky laws will differ among the states, but they are all based closely on the Uniform Securities Act, promulgated in 1956.

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