Private Offering Exemptions and Blue Sky Laws: Avoiding State Compliance Pitfalls

This CLE course will focus on the interaction of federal securities exemptions and state "blue sky" laws. The panel will discuss the general state regulatory framework, how state blue sky laws vary, and why some states can be particularly problematic when taking advantage of Regulation D Rule 504 and other federal exemptions.

Securities offerings must be registered or exempt from registration under both federal and state securities laws. The National Securities Markets Improvement Act of 1996 (NSMIA) amended the Securities Act to preempt state "blue sky" registration and review of "covered securities." However, Regulation D Rule 504 offerings, intra-state offerings, and registered direct or initial public offerings must still comply with state blue sky laws.

Many states have adopted the Uniform Securities Act of 1956 (the Uniform Act), but while some states have exemptions that complement federal exemptions, others do not. Notice requirements, standards of merit review (and review time), disclosure requirements, and filing forms in addition to the standard Form D in exempt offerings can vary from state to state.

Some of the larger states are also the most problematic. New York focuses on the registration or exemption from the registration of brokers rather than offerings. California requires notice filings for small offerings, and Florida has recission rights and unique exemptions from broker/dealer/sales agent registration for principals of the issuer.

Listen as our authoritative panel discusses best practices to ensure compliance with various blue sky laws and some noteworthy pitfalls to avoid.