Blue sky laws exist at the state-level to protect investors and regulate securities offerings. These laws give state securities regulators the authority to require a blue sky filing before securities are sold within their jurisdiction. While federal law, including the Securities Act and the Securities Exchange Act, governs nationwide, each state has its own set of blue sky filing requirements and registration requirements. Issuers, whether raising capital through private placements or a public offering, must comply with both federal regulations and state securities laws.
Why Blue Sky Filing Requirements Keep Shifting
Blue sky filings often change because each state law is different, and regulators can update their rules annually. Many states require notice filings for exempt offerings, while others require a registration statement with offering documents before approval. Filing fees also vary, with some states increasing state fees each year. These changes can impact accredited investors, private fund managers, and registered investment advisers who must file to remain compliant. Even exempt reporting advisers may face additional disclosure requirements depending on state securities regulators.
Filing Fees and the Cost of Compliance
One of the most challenging aspects of compliance is calculating and paying filing fees. State securities laws set their own filing requirements, and issuers must file in multiple states if securities are sold across jurisdictions. Filing fees can range from modest to significant depending on the number of investors and the securities sold. Each initial filing, annual amendment, or amended form may require the issuer to pay filing fees again. This makes compliance a costly part of selling securities, especially for smaller issuers.
How Federal Law Interacts With State Registration Requirements
Federal law preempts some state registration requirements for covered securities under the Securities Act and Rule 506. These exemptions provide safe harbor for certain exempt offerings, but issuers are still required to file notice filings and pay filing fees at the state-level. The Securities and Exchange Commission and exchange commission oversee federal compliance, but state blue sky laws still apply unless an exemption exists. Uniform Securities Act standards aim to create consistency, but each state-level registration process still maintains its own rules.
Practical Challenges for Issuers and Advisers
Issuers must determine which exemptions apply before selling securities. Most blue sky filings involve private placements to accredited investors, which trigger state filing requirements even when federal exemptions apply. Private fund managers and investment company professionals must track annual amendment deadlines and ensure compliance with both state law and federal regulations. A registered investment adviser may be required to file at the state-level despite already being registered federally. These overlapping requirements can create confusion, which is why offering documents must include full disclosure.
Call Geraci LLP for Guidance on Blue Sky Filing Requirements
Blue sky filing requirements can feel overwhelming, especially with changing state laws and varying filing fees. Are blue sky filings changing again this year? You do not have to navigate these complex compliance issues alone. The attorneys at Geraci LLP can help you understand how blue sky laws apply to your securities offerings, manage notice filings, and keep your private placements or investment company filings in line with both federal law and state registration requirements. Contact us today to ensure your transactions comply with every applicable filing requirement.
FAQ About Blue Sky Filings
What are blue sky filings?
Blue sky filings are state-level registration or notice filings required before selling securities in a specific state. They ensure compliance with blue sky laws and protect investors.
Do filing fees differ between states?
Yes, filing fees vary widely, and issuers must pay filing fees in each state where securities are sold. Some require payment with each initial filing and annual amendment.
How do federal exemptions affect state blue sky laws?
Even when covered securities qualify under federal law, state securities regulators may still require notice filings under state blue sky laws.
Who must file blue sky documents?
Issuers, private funds, registered investment advisers, and sometimes exempt reporting advisers must file depending on state securities laws and registration requirements.
Are blue sky filing requirements changing again this year?
Yes, many states adjust blue sky filing requirements, filing fees, and disclosure requirements annually, which means issuers must track state securities regulators’ updates to remain compliant.
