Blue Sky Laws, enacted by individual U.S. states, act as an extra layer of security for investors in said state. These regulations prevent fraudulent practices in securities offerings and sales, often going beyond federal requirements set by the SEC. By outlining specific regulations for securities activity, these laws help whistleblowers identify suspicious behavior that might violate state law. Blue Sky Laws create avenues for whistleblowing at the state level, offering another channel to report potential fraud alongside the SEC. Some states even incentivize whistleblowing through reward programs.

The scope of Blue Sky Laws is restricted to the issuing state, and they primarily focus on offerings and sales. However, alongside federal regulations, they offer investors more comprehensive protection and whistleblowers more options for reporting suspicious activity.