What does federal preemption of state law mean?
In the context of private placement securities law considerations, an offeror of securities generally needs to be aware of and comply with federal and state securities laws and regulations. If the offering person or entity is attempting to deal with investors in several (or many) states, the resulting regulatory burden can become very worrisome and costly, if not downright oppressive. The National Securities Markets Improvement Act (NSMIA) was enacted in 1996. It provides, that under certain limited circumstances, the substantive securities laws of the states are preempted by federal law, meaning that state laws and regulations no longer apply to certain types of securities transactions (as long as the federal law is complied with!). Check with your attorney to see if you can use NSMIA to your advantage!
