15 U.S.C. § 77r–1 — Preemption of State law

(a) Authority to purchase, hold, and invest; securities treated as U.S. obligations. (1) Any person, trust, corporation, partnership, association, business trust, or other entity created under federal or state law may buy, hold, and invest in: securities offered under section 77d(5); "mortgage related securities" (as defined in section 78c(a)(41)); "small business related securities" (as defined in section 78c(a)(53)); and securities issued or guaranteed by the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Federal National Mortgage Association (Fannie Mae) — to the same extent that entity is allowed, under any applicable law, to invest in obligations issued or guaranteed by the U.S. government or its agencies. (2) If state law caps how much an entity can invest in U.S. government obligations, these same four kinds of securities count toward that cap as if they were U.S. government obligations. (b) Exception; validity of earlier contracts. A state had until seven years after October 3, 1984, to pass a law that specifically names this section and either bans, or more narrowly limits, this investment authority for a particular type of person or entity. Even where a state did this, it could not undo a contract to purchase, hold, or invest that was already made, and it could not force the sale of securities already acquired before the state law took effect. (c) Exemption from state registration requirements. Securities offered under section 77d(5), mortgage related securities, and small business related securities are exempt from any state law requiring registration or qualification of securities or real estate — to the same extent as an obligation issued or guaranteed by the U.S. government. A state had until seven years after October 3, 1984, to pass a specific law (naming this section) requiring registration on different terms than those that apply to U.S. government obligations. (d) Implementation, for small business related securities specifically. (1) A state had until seven years after September 23, 1994, to pass a law specifically naming this section that bans or more narrowly limits this investment authority for small business related securities, for a particular type of person or entity. As in subsection (b), this cannot undo a contract already made or force the sale of securities already acquired. (2) A state had until that same seven-year deadline to pass its own law requiring registration or qualification of small business related securities on terms different from those for U.S. government obligations.