The blue sky laws Essay Example | Topics and Well Written Essays - 250 words

The blue sky laws - Essay Example It is a common practice for the Security and Exchange Commission (SEC) to regulate the security trading activities and enforce laws which are against fraudulent trading. However, the sky blue law has granted authority to state officials to share the responsibility of the SEC (the reduction of fraudulent securities trading and/or ensuring the punishment of violators). The sky blue law has been successful, to a significant extent, in regulating the securities trading. Even though every state implements the law, but take a different approach, there are similarities which form the basis of the effectiveness of the law. First, every state, in pursuant to the law, demands the registration of all players in the security market. The law requires that the stock brokers, the brokerage companies, and private security sellers register or be excused from the requirements of the registration (Legal Information Institute par. 1). Based on the registration strategy, the security agency of various states has successfully managed to reduce the fraudulent securities trading by denying a trading license or certificates to unqualified brokerage companies and/or individual stock brokers. Second, the sky blue law contains subsections that compel companies to release true and fair information to facilitate informed decision making. Third, the law provides for the punis hment of individuals or entities that engage in fraudulent securities trading and/or the release of false information. However, the law has not been very successful in the security regulation of national securities such as those listed on the New York Stock Exchange, NASDAQ among others (Legal Information Institute par. 1-3). In conclusion, the law has been successful in regulating securities trading. The registration process required to be followed by the players in the security market, the issuance of qualification certificates, the pressure to release true and fair information, and the punishment to