Glossary of Municipal Securities Terms


A colloquial term for state securities laws derived from a statement that such laws were directed at unethical promoters who “would sell building lots in the blue sky.” Although these laws vary from state to state, most contain provisions concerning (a) prohibitions against fraud, (b) regulation of broker-dealers and investment advisors doing business in the state, and (c) registration of securities. Municipal securities are generally exempt from state securities registration requirements, although municipal securities dealers selling them are subject to many states’ registration and regulatory requirements. See: BLUE-SKY MEMORANDUM. Compare: LEGAL INVESTMENT SURVEY.

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