Section I of this comment examines the global opportunities available to startups in the digital economy and how startups’ capital demands evolved in the new era of business. Section II analyzes the differences between merit-based securities regulation existing at the state level and disclosure-based regulation, which is the federal regulatory scheme. This Section provides an overview of the three most common methods of restricted securities registration at the state level. Section III examines the development of blue sky laws and the role states originally played in protecting investors. This Section further explores the evolving relationship between state and federal securities regulation, as federal lawmakers sought to make securities regulation more conducive to corporate activity and growth, while state securities regulators seek to remain relevant. Section IV examines the economic efficiency of a singular regulatory body in comparison to the current dual regulatory system in the United States. Section IV also analyzes Congress’s recent trend in encouraging looser capital acquisition, which substantially diminished states’ regulatory purview. The Comment concludes by recommending that, due to significant investor protections inherent in the federal regulatory framework and the discriminatory effect that the blue sky law framework imposes on startups, blue sky laws should be subjected to a blanket preemption by federal securities statutes.
Proving Equal Access to Capital in the Age of the Startup: The Case for Federal Pre-Emption of State Blue-Sky Laws,
13 J. Bus. Entrepreneurship & L.
Available at: https://digitalcommons.pepperdine.edu/jbel/vol13/iss2/4