When Do Blue Sky Laws Apply?
Blue sky laws usually apply to both the offer and the sale of securities. This means that blue sky laws must be reviewed before securities can even be offered for sale. It also means that a company issuing securities cannot avoid registration in certain states by making a widespread offer of securities and then simply declining to sell to investors in states where exemptions from registration are unavailable or where state regulators have not approved the security. Prudent issuers will consider the blue sky laws at the beginning of the process and tailor their efforts to both the federal and the state securities laws. How Are States Involved In Securities Regulation? State securities laws often apply in addition to, rather than instead of, federal securities laws, creating dual layers of regulation. As a result, companies issuing securities may be required to undergo state registration processes resembling the federal securities registration process. Although there is some overlap betw
