b'wrong and an investor complains or if the state learns of the sale of securities within its jurisdiction without the required Blue Sky filing, it could elect to prosecute the issuer at any time. As a matter of public policy, a company cannot indemnify the issuer for securities violations. Thus, the defense of a securities violation will be borne solelybytheissuer.Oncethedoorisopenedforthestateorfederal government (or a private civil attorney representing a disgruntled investor) to scrutinize the offering, it is possible that other violations could be found (such as misrepresentation and fraud), or paying unlicensed brokers for referring investors, subjecting the issuer to further liability and putting the entireinvestmentatrisk.Additionally,statesecuritiesagencieshave monthly meetings, so an enforcement action in one state could cause other state securities agencies to investigate and file suit against the issuer. Further, if you have failed to comply with the rules of the exemption for a federal offering (e.g., you didnt file the Form D, or you otherwise violated the rules for your federal exemption), you will likely be in violation of the states exemption from registration of your offering at the state level. It is far more likely that you will be investigated by a state securities agency than the SEC. The SEC seems to prosecute matters where tens of millions of dollars are at stake. I get weekly bulletins from the SEC that list the open investigations and litigation matters.However, I have seen the Colorado securities division investigate an issuerforissuingpromissorynotestothreeinvestorsinthestateof Colorado, and an issuer who advertised for private investors on Craigslist. I havealsoseentheWashingtonsecuritiesdivisioninvestigateandstop 87'