blue-sky law

American Heritage® Dictionary of the English Language, Fourth Edition

1. n. A law designed to protect the public from buying fraudulent securities.

GNU Webster's 1913

1. colloq. A law enacted to provide for the regulation and supervision of investment companies in order to protect the public against companies that do not intend to do a fair and honest business and that offer investments that do not promise a fair return; -- so called because the promises made by some investment companies are as boundless or alluring as the blue sky, or, perhaps, because designed to clear away the clouds and fogs from the simple investor's horizon.

WordNet 3.0

1. n. a state law regulating the sale of securities in an attempt to control the sale of securities in fraudulent enterprises