blue sky laws


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blue sky laws

n. laws intended to protect the public from purchasing stock in fraudulent companies that lack substance, such as those selling swamp land, non-existent gold strikes and dry oil wells, or who have no assets besides a post office box. Blue sky laws require that corporations advertising and selling shares to the public must get approval from the state corporations commissioner and/or the Securities Exchange Commission after providing details on financing and management. The term comes from the intent to prevent the existence of corporations that have nothing behind them but "blue sky." (See: corporation)

References in periodicals archive ?
Part II explains the current role of blue sky laws in regard to capital-formation regulation.
8) By the time Congress passed the federal Securities Act of 1933 (the 1933 Act), forty-seven of the forty-eight states as well as the then-territory of Hawaii had adopted blue sky laws.
Blue sky laws have an important role in the governance of capital formation.
These private and governmental state sanctions, therefore, amount to a significant role for blue sky laws.
The risk presented by the state blue sky laws and deceptive trade practices is particularly onerous because these regulations apply a negligence standard rather than one of fraud.