Blue Sky Law

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I. What Are “Blue Sky” Laws?

“A blue sky law is a state law in the United States that regulates the offering and sale of

securities to protect the public from fraud. Though the specific provisions of these laws

vary among states, they all require the registration of all securities offerings and sales, as

well as of stock brokers and brokerage firms. Each state's blue sky law is administered by

its appropriate regulatory agency, and most also provide private causes of action for

private investors who have been injured by securities fraud.” Blue sky law From

Wikipedia, the free encyclopedia.

II. Where Are California’s Blue Sky Laws Found?

California’s Blue Sky Laws are found in Sections 25000 through 25707 o f the California

Corporations Code, which sections are known as the Corporate Securities Law of 1968

(the “CSL”) and in the Regulations promulgated by the Department of Corporations.

The framework for California’s Blue Sky Laws is found in Sections 25110, 25120 and

25130 of the CSL.

(a) Section 25110. Necessity of qualification of security or exemption of security or

transaction

“It is unlawful for any person to offer or sell in this state any security in an issuer

transaction (other than in a transaction subject to Section 25120), whether or not by or

through underwriters, unless such sale has been qualified under Section 25111, 25112 or

25113 (and no order under Section 25140 or subdivision (a) of Section 25143 is in effect

with respect to such qualification) or unless such security or transaction is exempted or

not subject to qualification under Chapter 1 (commencing with Section 25100) of this

part. The offer or sale of such a security in a manner that varies or differs from, exceeds

the scope of, or fails to conform with either a material term or material condition of

qualification of the offering as set forth in the permit or qualification order, or a material

representation as to the manner of offering which is set forth in the application for

qualification, shall be an unqualified offer or sale.”

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jim Gulseth, JGPC LAW | Attorney Advertising

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