Blue Sky Laws are state-level securities regulations designed to protect investors from fraudulent or misleading practices when buying or selling securities. They require companies to register securities offerings, provide disclosures to investors, and ensure brokers and advisors are properly licensed and regulated, according to the Colorado Bar Association. While federal securities laws focus on national markets, Blue Sky Laws primarily address irregular securities and newly formed companies, notes the National Association of Bond Lawyers - NABL.
blue sky law
Blue sky laws are state securities regulations. That is, in addition to federal securities regulations, mainly the Securities Act of 1933 and the Exchange Act of 1934 , states may also require issuers of securities to register with their state and regulate securities fraud .
In the early 1900s, decades before Congress passed the federal securities acts, individual states adopted legislation regulating the sale of securities. The term “blue sky” derives from the characterization of baseless and broad speculative investment schemes which such laws targeted. The U.S. Supreme Court in Hall v. Geiger Jones Co., 242 U.S. 539 (1917) , described the targeted activity as “speculative schemes which have no more basis than so many feet of ‘blue sky.’' Blue sky laws developed in the years leading up to the Great Depression in response to ordinary investors losing money in highly speculative or fraudulent schemes promising high investment returns, such as oil fields and exotic investments in foreign countries
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Florida allowes for state enforcement after 2009,
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Florida Law Protects Investors
Something that most people are unaware of is that until 2009, the Florida Securities & Investor Protection Act (FSIPA) did not allow state officials to prosecute instances of securities fraud, as it was solely the jurisdiction of federal investigators. The law was altered after the 2008 recession – given the number of wealthy residents who call Florida home, it was seen as a positive move to have the state exert more control.
If you live in Florida and suspect that you have been the victim of fraud, or other irregularities in securities transactions, state authorities are able to pursue such claims, but consulting a securities law attorney is also a good idea. This is a complex area of law that can be hard to navigate on your own. An experienced professional can help guide you through
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