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capital formation, blue sky law, intermediation, regulation, Securities and Exchange Commission, SEC, exemptions, investors


There has long been complaints that the heavy regulatory hand of Blue Sky Law administrators prevents capital formation by small issuers. Using data recently collected by the SEC, the article reasons that the problems capital starved small issuers encounter is not the state regulator. The problems are elsewhere. The paper explores whether intermediation may ultimately enable more startups to raise needed funds. For this to occur, however, the paper explores the formidable obstacles the broker must overcome in meeting demanding suitability requirements.

Library of Congress Subject Headings

Administrative law, Capitalists and financiers, Securities and Exchange Commission, United States