blue-sky law

from The American Heritage® Dictionary of the English Language, 5th Edition.

• noun Any of various state laws regulating the issuance and sale of securities in order to protect the public from fraud.

from the GNU version of the Collaborative International Dictionary of English.

• colloq. A law enacted to provide for the regulation and supervision of investment companies in order to protect the public against companies that do not intend to do a fair and honest business and that offer investments that do not promise a fair return; -- so called because the promises made by some investment companies are as boundless or alluring as the blue sky, or, perhaps, because designed to clear away the clouds and fogs from the simple investor's horizon.

from WordNet 3.0 Copyright 2006 by Princeton University. All rights reserved.

• noun a state law regulating the sale of securities in an attempt to control the sale of securities in fraudulent enterprises