Blue sky law

Though the specific provisions of these laws vary among states, they all require the registration of all securities offerings and sales, as well as of stockbrokers and brokerage firms.

The first blue sky law was enacted in Kansas in 1911 at the urging of its banking commissioner, Joseph Norman Dolley, and served as a model for similar statutes in other states.

Its earliest cited use by the US Supreme Court was in an opinion by Justice Joseph McKenna in Hall v. Geiger-Jones Co., 242 U.S. 539 (1917), a case that addressed the constitutionality of state securities laws.

Even if the descriptions be regarded as rhetorical, the existence of evil is indicated, and a belief of its detriment; and we shall not pause to do more than state that the prevention of deception is within the competency of government and that the appreciation of the consequences of it is not open for our review.Kansas Banking Commissioner Dolley, railing against "blue sky merchants" while he pushed for passage of the Kansas statute in 1910, observed that certain fraudulent investments were backed by nothing but the blue skies of Kansas.

Also, The New York Times (and other national newspapers) frequently reported on the blue sky laws as various states began to enact them between 1911 and 1916.

A section of blue sky, featureless other than some light in the lower left corner
The emptiness of blue sky was a metaphor for the fraudulent basis of some securities that laws named after it sought to prevent by requiring disclosures to investors.