What state securities laws apply to angel and venture transactions?
In addition to regulation at the federal level, securities are the subject of regulation by the states as well. These regulatory schemes are colloquially referred to as “Blue Sky” laws. Blue Sky laws are often similar (and in many cases duplicative) of the federal securities laws. Although they are generally inapplicable to securities traded on national exchanges or quoted on Nasdaq, as a general rule, they do typically come in to play for private financings of emerging growth companies. Typically, compliance is a simple as making a limited filing (usually a copy of the Form D for the transaction and one or two other perfunctory forms) and paying a fee. However, different types of offerings give rise to different requirements, and requirements vary from state to state as well. Which states’ laws are applicable to a transaction will generally depend on where the purchasers reside.
