Investors in Kentucky and other parts of the United States are protected by both federal and state securities regulations known as Blue Sky laws. These rules are in place to protect investors from falling prey to deceptive sales tactics and other fraudulent activities.
While these regulations vary by jurisdiction, almost every state requires any securities offered up for sale to first be registered with them. There are some exemptions to this rule though.
Most states’ Blue Sky Laws also outline licensing guidelines for investment advisers, brokers and brokerage firms.
The Department of Financial Institutions (DFI) enforces Kentucky’s Blue Sky Laws. This state agency is comprised of four primary departments. These include the Enforcement, Compliance, Licensing and Registration and Prosecution Assistance Unit (PAU).
This state agency is responsible for vetting individuals wishing to register or sell securities including issuer agents, broker-dealers and investment advisers. DFI also steps in and investigates any reports of a suspicious activity or investor complaints that may arise. This state agency also produces and distributes educational literature aimed at teaching consumers about signs of investment fraud.
The compliance branch of the DFI ensures that all individuals who trade securities remain in compliance with Blue Sky laws, which are more formally known as the Securities Act of Kentucky. They perform countless on-site exams of brokers and investment advisers on an annual basis to make sure that they’re well-versed in the latest regulations in their field.
It’s in instances in which some type of impropriety is suspected that the PAU will step in. This division of the DFI investigates alleged illegal activity and helps move a case along toward a trial provided there’s ample proof that someone has acted unlawfully.
While the oversight of the DFI is supposed to minimize the risk of some type of impropriety occurring, deceptive individuals are sure to find a way to take advantage of unsuspecting individuals. If you’ve been led astray by a broker or adviser here in Kentucky, then an attorney can advise you of the next steps that you may want to take in your case here in Louisville.
