USA—Introduction to state securities (blue sky) laws
USA—Introduction to state securities (blue sky) laws

The following Financial Services guidance note provides comprehensive and up to date legal information covering:

  • USA—Introduction to state securities (blue sky) laws
  • State securities regulators
  • NASAA
  • Registration of securities transactions
  • Broker-dealer and investment adviser registration
  • Enforcement actions and other considerations

State securities regulators

Apart from the Securities and Exchange Commission (SEC), which is an independent government agency charged with administering the federal securities laws in the US, almost every state and territory has an agency or division dedicated to enforcing that particular state's securities laws, commonly referred to as 'blue sky laws'. Some are standalone securities agencies, others come under umbrella organisations aimed at general consumer protection within a particular state.

The term 'blue sky laws' is attributed to a 1917 US Supreme Court case which explained that state securities laws were designed to protect investors from 'speculative schemes which have no more basis than so many feet of blue sky.'

More information about each of the state securities regulators can be found on the North American Securities Administrators Association (NASAA) website.

Blue sky laws are similar to federal law in that they operate under a disclosure driven basis. This mandates that companies accurately disclose any and all information that will allow investors to make informed and educated investment decisions. The anti-fraud provisions help create the liability when a broker doesn't disclose information as required. What constitutes a fraud claim will vary based on that state's statutes and presiding case law. 

NASAA

NASAA supports the efforts of the state securities administrators and their staffs in enforcing the provisions of the state