blue sky law investment & finance definition

A state law that is designed to protect the public against securities fraud. Kansas was the first state to enact a securities registration law, in 1911. When announcing the legislation’s passage, lawmakers said, “The State was the hunting ground of promoters of fraudulent enterprises...so barefaced...that it was stated they would sell building lots in the blue sky.” Since then, state securities laws have been referred to as blue sky laws.