1.2 State Regulation & Blue Sky Laws
In addition to federal laws, each US state enforces its own 'Blue Sky' laws to protect local investors from fraudulent securities offerings.
Key FINRA Exam Takeaways
- State securities laws are known as 'Blue Sky Laws', based on the Uniform Securities Act (USA).
- NASAA (North American Securities Administrators Association): Advisory organization that drafts model state securities acts.
- State Securities Administrators oversee registration of broker-dealers, agents, investment advisers (IAs), and securities within their borders.
- Federal Covered Securities: Preempted from state registration under the National Securities Markets Improvement Act (NSMIA of 1996).
Knowledge Checkpoint • Section 1.2
State securities laws that govern the registration of securities, broker-dealers, and registered representatives at the state level are commonly called: