What is a blue sky law and how does it relate to securities fraud?

A blue sky law is a type of law designed to protect investors from fraudulent sales practices involving securities, such as stocks and bonds. These laws are designed to protect the public from unscrupulous sales and trading practices that drive down the value of securities. In North Carolina, blue sky laws are enforced by the North Carolina Securities Division. The Securities Division enforces blue sky laws by ensuring that companies offering securities for sale are registered with the Division, and that sales representatives have a proper license to trade securities within the state. Additionally, the Division reviews and approves all securities offering documents, to ensure they accurately represent the securities that are being offered for sale. Blue sky laws are closely related to securities fraud, as they are intended to prevent it. Securities fraud occurs when a company or individual misrepresents information regarding their securities in order to deceive the buyer into purchasing it. By ensuring that companies are properly registered, and that offering documents are accurate, individuals have a better chance of making an informed investment decision. If a company or individual violates blue sky laws, they can be subject to criminal and civil enforcement actions, as well as legal and administrative penalties. Blue sky laws thus provide an important layer of protection for investors in North Carolina, by ensuring companies and individuals selling securities are acting honestly and in the best interest of investors.

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What is a blue sky law and how does it relate to securities fraud?

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