Understanding Securities Law
The business professional's guide to securities laws
 

Preemption

As noted above, because of federal preemption of state regulation, the easiest private placements to clear under state Blue Sky Laws is a Regulation D, Rule 506 placement.

Merit Review

All other private placements require separate filings in most, but not all, states. Your problem is that many states subject these filings to merit review. This means the state has the right to make a subjective determination as to whether your offering is “fair, just and equitable” to the residents of your state. States can demand changes in your offering and may even deny you the right to sell in their state. This is the reason most practitioners recommend Rule 506 placements.