Series 14: 6.1.9. Blue Sky Laws

6.1.9. Blue Sky Laws

A blue sky law is a state law that regulates the offering and sale of securities. The purpose of a blue sky law is to protect a state’s investors against securities fraud. Securities are subject to blue sky laws and must be registered at the state level unless they are considered a “covered security” under the National Securities Markets Improvement Act of 1996.

Covered securities are securities that are exempt from state registration requirements. They include most municipal securities, as well as exchange-listed securities and mutual funds. However, states are still allow