Important and Relevant Facts You Should Know Regarding Blue Sky Laws

If you are involved in any type of securities investment activity, then chances are you need to be aware of Blue Sky Laws. These laws are meant to protect individuals from becoming victim to securities fraud. Blue Sky Laws also require that all brokerage firms, self-employed stockbrokers, and any of their offerings are fully transparent. These laws also apply to any type of public mergers. Here are some things you need to be aware of regarding these crucial laws:

Blue Sky Laws Have Been Amended Several Times Since 1933

Blue Sky Laws can be very complex, simply because they are different in each state. They first came into being during the presidency of Roosevelt as the Securities Act of 1933. These Blue Sky Laws were very complex until 1956, when the Uniform Securities Act was passed, making it a lot less complicated. An amendment to certain subsections of the law was passed in 1996.

The Uniform Securities Act of 1956 Has Some Notable Provisions

These would include “reason for existence,” “price,” “unsold allotment,” and “asset base.” Reason for existence simply means that the investment firm in question is fully in business and not bankrupt or being organized. Price refers to the security being offered at a reasonable level; Unsold allotment means that no “unsold allotments” are being relegated to the securities dealer, and asset base means that the individual issuing the stock has the required amount of assets.

Blue Sky Laws Prevent Fraud

Although it wasn’t entirely the whole reason, one of the main factors for the Great Depression was that there were many fraudulent investments floating around for alleged overseas oil fields. These Blue Sky Laws require all investments to be fully registered with their home state before they can go public.

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