Blue Sky Laws
BLUE SKY LAWS
BLUE SKY LAWS are state laws designed to prevent fraud in the sale of corporate securities. These laws preceded federal regulation of securities, which began in 1933. Kansas enacted the first statute in 1911, and by the end of 1923, forty-five of the forty-eight states had followed suit. The term "blue sky" arose when the U.S. Supreme Court stated in Hall v. Geiger-Jones Co. (1917) that the laws were intended to prevent speculative schemes based on nothing more than "so many feet of 'blue sky.'" The requirements of blue sky laws vary from state to state, but generally stipulate that securities offerings and brokers be registered.
Hazan, Thomas Lee. The Law of Securities Regulation. 3d ed. St. Paul, Minn.: West Publishing, 1998.
Ratner, David L. Securities Regulation in a Nutshell. St. Paul, Minn.: West Publishing, 1992.
See alsoStock Market .