4 Questions About Blue Sky

by | Mar 1, 2022 | Financial Services

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Blue sky laws are state regulated laws that govern the offering and sale of securities. If you want to make sure you won’t have any compliance issues, here are a few things you need to know before proceeding with your transactions.

Why Blue Sky?

The phrase “Blue Sky Laws” is taken from the words of J.N. Dolley in 1910, a Kansas Supreme Court Justice who wanted to make sure investors were protected from ventures that had no more basis than so many feet of blue sky.

Do Blue Sky Laws Matter?

Before you worry about Blue Sky compliance, you might be asking whether Blue Sky Laws matter. They do if you plan to sell securities. The law has changed since the Blue Sky laws were created, though, and the Securities and Exchange Commission (SEC) was established in 1933. These days, companies only need to worry about three things: fees, filings, and fraud.

What Happens If You Ignore the Law?

It’s tricky since Blue Sky laws can be very specific. If you are thinking about foregoing federal law so you can seek an exemption, this will depend on where you live. States have different laws, so if you’re in Florida, and you offer securities, you need to inform them about their three-day “right of rescission.” Failure to do so means they can exercise that right at any time instead of only those first three days. Also, you might end up refunding the investment with interest along with their attorney’s fees, so it’s best to ensure your compliance.

Can You Ensure Compliance?

One way to make sure your transactions are all compliant is to use the services of a stock transfer agent. With the company’s help, you won’t have to worry about missing anything. You can prevent costly mistakes down the road.

Avoiding large attorney fees for SEC filings and Blue Sky compliance is possible when you have a knowledgeable, experienced filing service provider on your side. Colonial Stock Transfer is your reliable source.