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Harmonization, Preemption, or Federalism?

By Michael Fransella
October 01, 2003
Blue Sky laws aren’t much fun for a securities lawyer. Often an afterthought, and nearly always an annoyance, they demand extra research and extra blurbs in offering documents, and accomplish little beside extracting a few dollars from the pockets of issuers to state coffers (and of course, to lawyers), and furnishing a further set of tripwires for companies and attorneys picking their way through the SEC minefield. When the SEC proposed defining a “qualified purchaser” under the Securities Act to be equivalent to an “accredited investor” under Regulation D,1 a move that would result in the preemption of state standards for many private offerings, I suspect most securities lawyers applauded hopefully, except perhaps the ones who specialize in Blue Sky laws. Even those of us otherwise ideologically committed to federalism, devolution, and local control couldn’t help but think that preemption would be a good thing, for our clients and for the securities market as a whole. An example, perhaps, of self interest trumping ideology.