#SKY HAVEN FEET REGISTRATION#

California, on the other hand, requires issuers to meet a merit test to show that their securities are fair for investors under Title 4, Division 1 of the California Corporations Code.ĭespite the differences from state to state, blue sky laws share certain features in their approach to prevent misinformation about investment returns and risks.

#SKY HAVEN FEET REGISTRATION#

New York, for example, does not require registration of securities except for securities sold in real estate or intrastate offerings under N.Y. States may still enforce the anti-fraud provision of their blue sky laws even where the NSMIA exempts the security from that state’s blue sky law.Įven where blue sky laws apply today, states vary widely in their method of regulation. Securities exempt by Rule 506 under federal law are also exempt under blue sky laws. Under it, certain securities listed on stock exchanges, such as NASDAQ or NYSE, are exempt from state blue sky laws. While securities regulation remains a patchwork of federal and state law, the National Securities Market Improvement Act of 1966 (NSMIA) provided for greater clarity and uniformity. Securities regulation in the United States thus consisted of a nationwide patchwork of state laws, which became even more complicated once Congress passed federal securities laws that duplicated some of the areas regulated by blue sky laws. 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.īy 1933, when Congress began regulating securities, all states except Nevada had blue sky laws. The term “blue sky” derives from the characterization of baseless and broad speculative investment schemes which such laws targeted. In the early 1900s, decades before Congress passed the federal securities acts, individual states adopted legislation regulating the sale of securities.

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. Blue sky laws are state securities regulations.

Sky haven feet