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.