Blue sky laws, also known as state securities laws, were established in the early part of the 20th century in the United States to protect investors from fraud. The purpose of these laws is to ensure that securities offerings are legitimate and are made in compliance with the applicable regulations.

The Securities Act of 1933 and the Securities Exchange Act of 1934 were federal laws that set the foundation for the blue sky laws. Each state then established their own set of rules and regulations on the sale of securities. Generally, these laws require issuers of securities to register with state agencies and provide detailed disclosures of their offerings.

The registration process requires the issuer to provide information about its business, management, financial condition, and other important information about the securities being offered. This process is also used to ascertain whether any efforts are being made to deceive potential investors. A registration statement must be filed with the state securities regulator before the securities can be offered within the state or sold to its residents.

Registration also helps to ensure that investors are provided with enough information to make informed decisions about their investments. This includes details about the risks and rewards involved in the investment, and the track record of the promoters, among other information.

Blue sky laws operate in conjunction with the federal securities laws, and in cases of duplication take precedence. In other words, the more stringent requirements take precedence, thus protecting investors from fraud. For example, disclosure requirements in the state's blue sky laws might be more strict than the ones applicable under the federal laws, in which case the issuer must follow the tougher regulations.

In addition to state-level securities regulations, securities exchanges such as the New York Stock Exchange and NASDAQ have their own rules and regulations that apply to their members. These self-regulatory organizations (SROs) provide an added layer of consumer protection by ensuring that their members are following the established regulations.

Blue sky laws are an important part of investor protection, and are an important part of the legal system. These and other regulations help to ensure that legitimate investments are being made and that investors are being adequately informed about the risks associated with their purchases. By offering protection against frauds, blue sky laws play a crucial role in ensuring informed and informed decision making by investors.