The term "blue sky laws" refers to state securities laws that complement the federal Securities Act of 1933. The federal Securities Act and state securities laws differ in important wasy. The federal Securities Act generally adopts a "disclosure" perspective to securities regulation, where the government does not decide the fairness of an offering, but only polices the disclosure of all material information. In contrast, many states have "merit regulation" approach, where state officials opine on the fairness of the offering.
The two regimes of securities regulation work side-by-side in some types of securities offerings. However, largely as a result of the 1996 National Securities Markets Improvement Act, state blue sky laws are preempted in many public offerings and some of the largest and most important private offerings.