Financial Industry Regulatory Authority (FINRA) Practice Exam 2025 - Free FINRA Practice Questions and Study Guide

Blue-sky laws are state-level regulations designed to protect investors from securities fraud. Each state has its own set of blue-sky laws, which require businesses to register their securities offerings and provide specific disclosures to potential investors. The rationale behind these laws is to prevent the sale of dubious or fraudulent securities and to foster transparency in the securities markets at the state level.

State securities regulators enforce these laws and are responsible for overseeing the registration of securities, reviewing disclosure documents, and ensuring compliance with local regulations. Their jurisdiction allows them to address specific concerns related to their respective states, making the enforcement of blue-sky laws a state-driven effort.

In contrast, the SEC operates at the federal level and primarily oversees federal securities laws, while organizations like FINRA and the MSRB focus on specific aspects of the financial markets and do not have the authority to regulate state-level blue-sky laws directly. Therefore, state securities regulators are the appropriate entities for regulating blue-sky laws.