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The Uniform Securities Act of 1956 forms the foundation of Blue Sky Laws in different states. Although the reference is the same, there are wide variations in each state’s rules and regulations, especially when it comes to filing fees. For example, while some states like Kansas charge a penalty for late filing, others like Indiana have no filing fees at all. The tax is either fixed or variable, applicable to every offering or a one-time registration for an entire year. The variable fee is usually charged as a percentage of the total offering with an upper and lower cap. The final Blue Sky fees paid by the issuers is a permutation and combination of all these factors, and it is generally assumed that higher taxes bring more revenue.
In our research, we could not find precise data on why the states calculate differentially but from all the information gathered, the conclusion narrows down to the following two possibilities:
- States with low GDP and low state ranking tend to charge more, possibly to improve their growth rate
- States with high GDP and high state ranking also tend to charge more, perhaps to up-keep the services and infrastructure
Based on the descriptions above, we have picked some of the most expensive states when it comes to Blue Sky state filings:
Vermont
In Vermont, the filing fee is $2,000, and the annual renewal fee is $1,500 for Tier 1 of Reg A. For Tier 2 Reg A and Reg D filing, it is $600 per class/type of security.
Vermont stands at the 40th position out of the top 50 states for doing business and 9th out of 50 best states to live in, which is surprising as Vermont’s GDP is way down at the 52nd position.
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US Virgin Islands
Tier 1 Reg A filing in the US Virgin Islands is between $1000 and $3000 as the lower and upper cap, respectively, and a flat $1,000 for Tier 2 Reg A. For Reg D the filing fee is $1,500 with a late fee of $3,000 and $50 for every amendment.
US Virgin Islands do not make it to the top 50 states, and the GDP rank is also 54. It looks like a high fee is one of the primary revenue sources for the territory.
New York
New York has a variable fee structure with a minimum of $300 and a maximum of $30,000 for Tier 1 Reg A filing. The range for Tier 2 Reg A and Reg D filing is $300 to $1200 with real estate filings coming in at nearly $2,000.
New York occupies the 27th position in the top 50 states for doing business and 17th in the top 50 best states to live in, but wait; the GDP is also 3rd highest, which brings us to possibility 2, as described above.
Massachusetts
In Massachusetts, the minimum fee is $300, and the maximum cost is $1,500 for Tier 1 Reg A filing. For Tier 2 Reg A filing and Reg D filing, the minimum amount is $150, and the maximum is $750.
Massachusetts stands at an impressive 14th position in the top 50 states for doing business and 2nd in position out of 50 best states to live in. GDP is 11th highest, and everything looks rosy. The high fee seems like an attempt to continue maintaining its high ranking.
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