Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Blue Sky Laws

What it is:

Blue sky laws require the registration of brokers, brokerage firms and investment professionals in order to provide transparency of financial offerings and protect investors from investment fraud. Each state has its own blue sky law.

How it works (Example):

In an attempt to make money quickly at the expense of naïve or uninformed investors, companies offer enticing investment opportunities with little legitimate backing. For this reason, each U.S. state has blue sky laws in place to thwart such attempts and protect the public’s financial interest. Though such laws vary by state, blue sky laws require that the details of new securities issued be registered with state authorities for examination in order to assure the public of their legitimacy.

Why it Matters:

Blue sky laws help to prevent an individual’s loss from an investing scam by forcing companies to provide detailed information about potential stock or bond issues.

Related Terms View All
  • Auction Market
    Though most of the trading is done via computer, auction markets can also be operated via...
  • Best Execution
    Let's assume you place an order to buy 100 shares of Company XYZ stock. The current quote...
  • Book-Entry Savings Bond
    Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to...
  • Break-Even Point
    The basic idea behind break-even point is to calculate the point at which revenues begin...
  • Calendar Year
    If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December...