TLDR:
Blue sky laws are state-level securities regulations in the United States requiring companies to register securities offerings and provide financial information to protect investors from fraud.
Why Blue Sky Laws Matter
Blue sky laws create an additional layer of securities compliance beyond federal SEC requirements, meaning startups offering securities must analyze both federal and state-level obligations. Many startups qualify for exemptions from state registration (most commonly through the federal preemption of Regulation D offerings), but they must still file notice filings in states where they sell securities and pay associated fees. Failing to comply with blue sky laws can result in securities violations that give investors rescission rights — meaning they can demand their money back.