I recently ran across an article concerning a row between Utah’s Securities Commission and California’s Commissioner of Corporations, E.C. Bellows.  Engineering & Mining Journal, Bingham Galena on Trail of California Corporations Commission, 313 (Aug. 20, 1921).  The fight’s genesis was a June 18, 1921 permit issued by the Utah Securities Commission authorizing the sale of 467,100 shares of the Bingham Galena Mining Co. at a maximum price of $.75 per share.   The offering was to be underwritten by one George Graham Rice of the Fidelity Finance & Funding Company.  Utah approved the sale notwithstanding Mr. Rice’s “unsavory reputation” and the protests of the Utah chapter of the American Mining Congress and others.  The Mines Handbook, 1490 (1922).  A month later, Mr. Rice ran into trouble when he tried to sell the shares in California without a permit.  Commissioner Bellows pulled no punches in his criticism of Utah’s Securities Commission and Mr. Rice:

As was expected, the Utah securities commission has attempted to whitewash these offenders, but as far as the California public is concerned the effort will be unavailing. Any stock proposition polluted by the touch of George Graham Rice and his associates will be regarded with grave suspicion in California. It has been stated that nothing was ever created in vain, but California investors incline to the opinion that the hand of Providence slipped a cog when George Graham Rice put in an appearance.

Sacramento Union, Rice is Dared to Return to California – Bellows Invites Him to Put Himself Under Jurisdiction of This State, 5 (July 30, 1921).  Utah responded by asking the newly appointed U.S. Attorney General, Harry M. Daugherty, to investigate Commissioner Bellows under the Sherman Antitrust Act.  Commissioner Bellows was not impressed, reportedly saying:

[T]o hold that every Blue Sky Law is null and void with respect to supervising the sale of issues is a position too puerile and foolish for consideration.

Mining & Scientific Press, 389 (Sept. 17, 1921).  The denouement of this contretemps was in California’s favor with Utah eventually pulling its permits.  Engineering & Mining Journal-Press, Bingham Galena Again in Bad Grace with Securities Commission, 210 (July 29, 1922).

Who Coined “Blue Sky Law”?

Tulane Professor Ann M. Lipton explores the origin of the term “Blue Sky Law” in this post.