What are "blue sky laws"?

"Blue sky laws" refer to state regulations that govern the offering and sale of securities to protect investors from fraud. These laws are designed to require sellers of securities to register their offerings and provide full disclosure of relevant information, ensuring that potential investors are adequately informed before making an investment decision. The term "blue sky" denotes the idea of preventing speculative schemes that have no more basis than "a piece of blue sky."

Essentially, blue sky laws aim to create a safer investment environment by mitigating the risk of securities fraud and providing avenues for enforcement against fraudulent schemes. Each state has its own set of blue sky laws, which can vary in terms of registration requirements and compliance measures, thereby addressing the specific needs and circumstances of investors in that state.