A Historical Introduction to Arizona's Securities Laws
33 Pages Posted: 20 Oct 2012 Last revised: 10 Apr 2015
Date Written: April 23, 2013
The article recounts the history of Arizona’s securities laws and the distinctly non-federal approach to civil liability that exists under Arizona securities law. Arizona’s first securities legislation was a 1909 bucket-shop act that prohibited betting on price changes in securities and commodities. Three years later, in 1912, Arizona became the second state to enact a blue-sky law. Arizona supplemented the 1912 Act with two more blue-sky laws in 1917 and 1921. These early statutes included registration, licensing, and criminal provisions, but they did not provide for civil liability. In 1951, Arizona’s legislature replaced the blue-sky laws with an entirely new securities act that included statutes that expressly provide for civil liability. The 1951 Act was enacted in the aftermath of highly publicized securities frauds for which existing securities laws provided inadequate civil remedies and criminal penalties. At the federal level, Congress has passed laws that curtail civil actions for securities fraud. Concurrently, the U.S. Supreme Court has repeatedly issued decisions that use strict-statutory interpretation and judicially identified policy considerations to curb civil liability for securities fraud. By contrast, Arizona’s courts have interpreted Arizona’s securities laws to expand civil liability. In interpreting Arizona’s securities laws, the state’s appellate courts have refused to follow federal securities law interpretations that do not advance the policy of investor protection that prompted passage of the 1951 Securities Act.
Keywords: Arizona, blue sky laws, bucket shop, IBA, implied liability, state securities law, preemption
JEL Classification: K22
Suggested Citation: Suggested Citation