What Are Blue Sky Laws?

Full Video Transcript

Individual states passed laws to protect consumers and prevent them from entering into a fraudulent securities deal. Companies with publicly traded stock must comply with certain standards, which allow investors to make informed decisions about their investments. These securities offered for sale must qualify and be registered with the appropriate state authorities. Companies that plan to offer public stock or a brokerage firm that wants to handle such stock, must file and register with the state where it is based. The state then decides whether the company is eligible to sell stock and securities.