Blue-Sky Laws
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. The term is said to of originated in the early 1900s by a Supreme Court Justice who wanted to protect investors from speculative ventures that had, “as much value as a patch of blue sky.”
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