LawMeaning

blue sky laws

In one sentence

State laws regulating the sale of securities to protect investors from fraud.

Plain English

Blue sky laws are state-level regulations that govern how companies can sell stocks, bonds, and other investments to the public. They exist because early securities scams were so outlandish that regulators said fraudsters were literally selling pieces of the blue sky. These laws require companies to register their securities with state authorities and provide honest information to potential investors before selling.

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Example

A startup wants to sell shares to residents of California. Before it can do so, it must register those shares with California's Department of Financial Protection and Innovation and provide detailed financial disclosures, even though the company is already registered with the federal Securities and Exchange Commission.

Used in a sentence

“The company violated blue sky laws by selling unregistered securities to state residents without proper disclosure.”

Related terms

Breach of Contract
Failure to do what a contract requires, without a valid legal excuse.
Express Warranty
A clear, direct promise about a product's quality, performance, or characteristics.
Disclaimer
A legal refusal by a beneficiary to accept an inheritance or gift.
Written Contract
An agreement between parties that is documented in writing and signed by the parties involved.
Contract Formation
The process by which parties create a legally binding agreement.
Entire Agreement Clause
A contract provision stating that the written agreement is the complete and final deal between parties.
Stand Your Ground
A law allowing a person to use force, including deadly force, to defend themselves without a duty to retreat.
Castle Doctrine
A law stating that a person's home is their castle and they can use force to defend it without duty to retreat.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.