LibGuides: Corporate & Securities Law: State Securities Law (2024)

FAQs

What are state securities laws? ›

In the United States, each individual state has its own securities laws and rules. These state statutes are commonly known as "Blue Sky" Laws. Although the specific provisions of these laws vary among states, they all require the registration of securities offerings, and registration of brokers and brokerage firms.

Simply put, securities law protects investors as traders while corporate law protects investors as owners. Distinguishing between trading and ownership protection provides a strong basis for regulating securities and corporate law in different ways.

Securities law is a complex and intricate area of law. While it is possible for investors to pursue a FINRA arbitration claim without legal representation, it's strongly recommended that you enlist the help of an experienced attorney who has knowledge of securities law and filing procedures.

It was not until the 1930s that Congress began enacting federal securities laws. Today, all fifty states, the District of Columbia, and some U.S. territories have securities statutes. These laws, sometimes called “blue sky laws,” have existed alongside the federal securities laws for decades.

State administrators enforce a state's "Blue Sky Laws." In addition to the federal securities laws, each state has its own set of securities laws—commonly referred to as "Blue Sky Laws"—that are designed to protect investors against fraudulent sales practices and activities taking place within the state's jurisdiction.

Federal law primarily regulates securities, but some state blue sky laws also have important regulations on securities.

Often referred to as the "truth in securities" law, the Securities Act of 1933 has two basic objectives: require that investors receive financial and other significant information concerning securities being offered for public sale; and. prohibit deceit, misrepresentations, and other fraud in the sale of securities.

Jobs in these aspects of corporate law tend to be more lucrative than most lawyer positions. According to the Law Crossing legal job website, the average salary among U.S. antitrust lawyers and securities attorneys is about $118,000.

What is it like to be a securities lawyer? ›

Securities litigation work is much like other types of litigation – drafting documents, conducting discovery, doing legal research and preparing materials for hearings.

A securities lawyer is an attorney who's experienced and knowledgeable in securities law—the branch of the law that deals with investments. Securities law governs things like what information a publicly-traded company must make available, honesty and fair dealing in the investment world, and how investments are traded.

Rule 144 provides an exemption from registration requirements for the sale of securities through the public markets if a number of specific conditions are met. The regulation applies to all types of sellers, in addition to issuers of securities, underwriters, and dealers.

The Howey Test, which was developed by the Supreme Court in a landmark 1946 case, defines an “investment contract” as possessing the following attributes: 1) An investment of money. 2) In a common enterprise. 3) With the reasonable expectation of profits. 4) Due to the managerial efforts of others.

Under it, certain securities listed on stock exchanges, such as NASDAQ or NYSE, are exempt from state blue sky laws. Securities exempt by Rule 506 under federal law are also exempt under blue sky laws.

State Securities Regulations are referred to as "Blue Sky" Laws. State laws are designed to protect individuals from investing in fraudulent security offerings.

The United States Treasury offers five types of Treasury marketable securities: Treasury Bills, Treasury Notes, Treasury Bonds, Treasury Inflation-Protected Securities (TIPS), and Floating Rate Notes (FRNs).

Protecting Investors

We protect investors by vigorously enforcing the federal securities laws to ensure truth and fairness. We deter misconduct, hold wrongdoers accountable, and provide resources to help investors evaluate their investment choices and protect themselves against fraud.

When market participants violate federal securities laws, the SEC can bring a civil enforcement action. The SEC or Department of Justice can also bring criminal actions for particularly serious violations. The Exchange Act also allows investors to sue market participants who have defrauded them.