I often hear 'blue sky laws' in reference to startup or early level businesses. What does it mean?


1 Answer 1


Blue Sky Laws refer to various state laws requiring disclosure in new security offerings.

Here's a summary:

A blue sky law is a state law in the United States that regulates the offering and sale of securities to protect the public from fraud. Though the specific provisions of these laws vary among states, they all require the registration of all securities offerings and sales, as well as of stockbrokers and brokerage firms. Each state's blue sky law is administered by its appropriate regulatory agency, and most also provide private causes of action for private investors who have been injured by securities fraud.

From the United States Securities and Exchange Commission

Every state has its own securities laws—commonly known as "Blue Sky Laws"—that are designed to protect investors against fraudulent sales practices and activities. While these laws can vary from state to state, most states laws typically require companies making small offerings to register their offerings before they can be sold in a particular state. The laws also license brokerage firms, their brokers, and investment adviser representatives.

  • 2
    This is why I love the SE network; I can't believe I hadn't heard this term (or that my quick google search failed to pick it up...) Commented Oct 2, 2013 at 23:18

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