What is Blue Sky Law in Securities Fraud?

Question: What is a Blue Sky law?

Response: This is a type of securities fraud law that is enforced by a state, rather than by the Securities & Exchange Commission.  Blue Sky laws set forth notice and filing requirements in the various states and require that brokerage firms and individual brokers conducting business in the state to register security offerings.  The laws also require investment advisors who plan to provide services involving the rendering of investment advice in the state to comply with reporting and registration requirements.  They oversee the offer and sale of securities.  The laws are administered by a state Securities Commissioner who is authorized to carry out investigations and initiate fraud actions against securities violators.

Answered by Yara Zakharia

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