6.5.2 Securities Laws in Other States

Debt securities issued by California public agencies are often sold to investors in states outside of California. Like California, other states have enacted state securities laws (commonly referred to as Blue Sky laws). Before Congressional enactment of the National Securities Market Improvement Act of 1996 (NSMIA), many states required securities offered in the state to meet creditworthiness standards (known as “merit regulation”) or required additional disclosure in offering documents. The NSMIA expressly preempted such state regulation, with certain exceptions. One of the preemptions is the regulation of securities issued by municipal issuers located in that state. However, the NSMIA allowed states to continue to require specified notice filings and to continue to collect fees. As a result, the securities laws of states outside of California may require that filings be made, or fees paid, for certain types of securities issued by California public agencies to be offered or sold in that state