dissenting.
I respectfully dissent from the opinion of my colleagues. The majority recognizes New Jersey’s right to regulate that portion of a multi-state transaction occurring within its borders because “one state must prevail” in a dispute that extends beyond its borders and involves residents of other states. Maj. Op. at 787. The approach the majority uses would be helpful to resolving a choice of law dispute, but it is of only limited assistance in adjudicating this dispute under the Commerce Clause. New Jersey does not allege that Goldmen’s sale of Imatec stock involved fraud, and the district court concluded that fraud was not involved. See Dist. Ct. Op. at 7 (“The Bureau does not advance a single allegation of fraud”). Thus, the issue is not which state will win, but whether New Jer*790sey’s interest here is sufficient to allow it to prevent Goldmen from soliciting residents of other states. The district court concluded, “the Bureau is reaching out to prohibit a sale, not made to New Jersey residents, which takes place in a national securities market, and which is regulated by each state to protect its own citizens.” Id. The district court concluded that New Jersey’s interest was not sufficient to allow that result. I agree, and would affirm the well reasoned decision of the district court.
I.
My colleagues cite General Ceramics Inc. v. Firemen’s Fund Ins. Co., 66 F.3d 647, 656-59 (3rd Cir.) to justify the conclusion that New Jersey’s interest in regulating offers made from within its borders justifies preventing Goldmen from offering shares of Imatec to buyers residing in states where that security is properly registered. Maj. Op. at 787.
In Firemen’s Fund, the issue was
whether New Jersey or Pennsylvania law controls the interpretation of an exception to a pollution-exclusion clause when New Jersey has significant contacts with the insurance contract and the insured but Pennsylvania is the site of the hazardous waste site giving rise to the liability for which coverage is sought.
Id., at 649. The dispute arose in a diversity case where we applied New Jersey’s choice of law rules to determine if the law of New Jersey or Pennsylvania governed the interpretation of an exception to a pollution-exclusion clause in a comprehensive liability insurance policy. The loss that gave rise to the dispute resulted from costs incurred under the Comprehensive Environmental Response Compensation and Liability Act (“CERC-LA”). Our analysis focused upon which state’s law controlled “whether the phrase ‘sudden and accidental’ extended coverage for the gradual discharge of pollution.” Id., at 652. We held that New Jersey law applied. Id. (“Based on the strong public policy that underlies New Jersey’s broad interpretation of the pollution-exclusion exception, ... New Jersey law governs.”). We reached that result because the interests of Pennsylvania would not have been furthered by applying its law to that particular dispute, whereas the interests of New Jersey were furthered by applying the law of New Jersey. Id., at 657.
That does not assist us here. The controversy here is not merely between the conflicting regulations of two or more states. Rather, this dispute focuses upon the impact of that conflict upon interstate commerce. Nor, do I believe that the Blue Sky Cases1 support the majority’s conclusion. Although those cases do address the scope of the restrictions imposed on states under the Commerce Clause, they do not address the precise issue that Goldmen raises. In Merrick, (one of the Blue Sky Cases) the Court did not even address whether the' Blue Sky Law at issue violated the Commerce Clause. Instead, the Court reserved that question for decision in Hall v. Geiger-Jones — a companion case to Merrick. See Merrick, 242 U.S. at 590, 37 S.Ct. 227. In Hall, the Court reviewed an Ohio law that required sellers of securities to obtain a license before offering any securities for sale within the state. An Ohio securities broker with clients in several states including Ohio (Geiger-Jones) brought a multi-faceted challenge to the legality of Ohio’s licensing requirement. The primary assertion was that Ohio’s licensing requirement was an improper exercise of the state’s police power. 242 U.S. at 548, 37 S.Ct. 217. The Court concluded that the requirement was a valid means of protecting against fraud, and noted that the Commissioner’s ability to deny or revoke a license was qualified by a duty of good faith, and subject to judicial review. Id., at 553, 37 S.Ct. 217. The Court reasoned:
The provisions ... apply to dispositions ... within the state, and while information of those issued in other states ... is required to be filed, they are only affected by the requirement of a license of one who deals in them within the state. Upon their transportation into the state there is no impediment, — no regulation of them or interference with them after they get there. *791There is the exaction only that he who disposes of them there shall be licensed to do so, and this only that they may not appear in false character ... and this certainly is only an indirect burden upon them as objects of interstate commerce, if they may be regarded as such. It is a police regulation strictly, not affecting them until there is an attempt to make disposition of them within the state. Such regulations affect interstate commerce in them only incidentally.
242 U.S. at 557-58, 37 S.Ct. 217 (emphasis added). Here, the regulation in question has a far greater impact upon commerce outside of the state. It prevents solicitation of residents of other states and thereby has the practical effect of halting sales to individual purchasers unless those purchasers know of the securities and make Goldmen an unsolicited offer to buy. In fact, the Bureau’s entire justification for § 60 rests upon its admitted desire to stop such solicitations, and thereby stop solicited sales. Therefore, it is as misleading as it is inaccurate to conclude that the extraterritorial affect of § 60 is “incidental” and to uphold the prohibition as a regulation of New Jersey’s “half’ of an interstate transaction. See Maj. Op. at 787. The majority states:
If New Jersey seeks to block Goldmen’s offering but the buyer’s state (say, New York) would allow it, one state must prevail. One state can in effect “force its judgment” upon the other----block the transaction even if New York would permit it.
Goldmen’s alternative is no better, however: under its view of the dormant commerce clause, New York’s approval would permit the transaction, over New Jersey’s objection. Thus, the difference between New Jersey’s Blue Sky law and Goldmen’s proposal is simply the market’s default rule: should the transaction be allowed if either state permits, or blocked if either side objects? Such questions of the market’s “structure” and its “method of operation” are quite simply beyond the concern of the Commerce Clause, as they “relate to the wisdom of the statute, not to its burden on commerce.” Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 127-28, 98 S.Ct. 2207, 57 L.Ed.2d 91 (1978).
Maj. Op. at 787. However, applying § 60 to bar solicitation where a security could otherwise be sold goes to the very heart of the Commerce Clause. The question is not which state’s regulations will prevail, but whether either state has an interest of sufficient gravity to allow it to enforce its regulations in a manner that so effects interstate commerce. The majority’s analysis focuses only upon the interest of the inconsistent regulatory schemes in the relevant “competing” states. That approach fails to afford proper recognition of the overriding federal interest that must control under a Commerce Clause analysis. See Kassel et al. v. Consolidated Freightways Corp. 450 U.S. 662, 101 S.Ct. 1309, 67 L.Ed.2d 580 (1981).
In Kassel, an interstate trucking company sought to strike down an Iowa law that limited the size of trucks on interstate highways in Iowa to 50 feet. Consolidated Freight-ways sought to invalidate the restriction arguing it burdened interstate commerce. Neighboring states, and nearly all other states in the west, and midwest allowed trucks up to 65 feet in length on the portion of interstate highways within their borders. Accordingly, interstate trucking companies had to either use shorter trucks to transport cargo through the midwest, route cargo around Iowa, or switch trailers at the Iowa border in order to insure that they did not exceed Iowa’s length restriction. The Court concluded that Iowa’s proffered justification of safety was tenuous at best because the record did not establish that reducing trailer size had as direct an impact on the safety of an interstate highway as Iowa claimed.
Regulations designed for [safety] nevertheless may further the purpose so marginally, and interfere with commerce so substantially, as to be invalid under the Commerce Clause.... In [Raymond Motor Transportation, Inc. v. Rice, 434 U.S. 429, 98 S.Ct. 787, 54 L.Ed.2d 664, (1978) ] we declined to accept the State’s contention that the inquiry under the Commerce Clause is ended without a weighing of the asserted safety purpose against the degree of interference with interstate commerce. 434 U.S., at 443, 98 S.Ct., at 795. This “weighing” by a court requires — and indeed the constitutionality of the state reg*792ulation depends on — a sensitive consideration of the weight and nature of the state regulatory concern in light of the extent of the burden imposed on the course of interstate commerce.
Id. at 670, 101 S.Ct. 1309 (internal quotation marks omitted).
Although it appears at first that Kassel can easily be distinguished from the facts before us, I believe the ease with which Kassel can be dismissed is somewhat illusory. The distinction stems from the tangible nature of the commerce involved in Kassel rather than the quality of its relationship to interstate commerce. The impact of a regulation upon trucks moving on interstate highways is readily apparent. The impact of § 60 upon commerce outside of New Jersey is intangible, but nevertheless real. New Jersey’s interest here is not prevention of fraud because fraud is not alleged. Thus, I disagree with the weight the majority attaches to New Jersey’s claimed interest in protecting the reputation of securities dealers that sell from offices in New Jersey. Maj. Op. at 788. New Jersey’s attempt to preserve § 60 by pointing to its legitimate interest in preventing fraud is not unlike Iowa’s attempt to preserve its regulation by arguing that it furthered the safety of its interstate highways in Kassel. That argument was not supported by the record there, and the fraud argument is not supported by the record here. New Jersey can not prevent the sale of a security in a state where the sale is proper merely by alleging a concern for the speculative nature of Imatec, and alleging concerns regarding Goldmen’s business practices. If Goldmen (or any other broker) engages in misleading and improper business practices in the sale of Imatec stock (or any other stock or commodity for that matter) New Jersey can certainly investigate and remedy the situation under its police powers. See Merrick, supra. The Bureau can prohibit fraud in the offer, sale and purchase of securities, N.J.S.A. 49:3-52; it can prohibit misleading filings, N.J.S.A. 49:3-54; it can prohibit unlawful representations concerning registration, N.J.S.A. 49:3-55; it can conduct investigations, subpoena witnesses and require the production of evidence, N.J.S.A. 49:3-68; and it can enjoin illegal conduct, N.J.S.A. 49:3-69.
Accordingly, the majority’s citation to Stevens v. Wrigley Pharma. Co., 154 A. 403, 403 (N.J. Ch. Div.1931) (noting that New Jersey’s interest in regulating in-state offers to out-of-state buyers is “not so much to protect the citizens of other states, as to prevent this state from being used as a base of operations for crooks marauding outside the state.”), and Simms Inv. Co. v. E.F. Hutton & Co., 699 F.Supp. 543, 545 (M.D.N.C.1988) (“[T]he laws protect legitimate resident issuers by exposing illegitimate resident issuers.”), is misplaced. See Maj. Op. at 788. If that is New Jersey’s interest here, let the Bureau allege and prove fraud. We are far too quick to allow New Jersey to proceed as though it had established a fraud it is not even alleging. We ought not rest our decision here upon concerns that arise from insinuations and implications about unproven, and unal-leged, conduct on the part of Goldmen.
The majority also relies upon New Jersey’s ability to regulate “in-state offers to out-of-state buyers” stating that such an interest “also serves New Jersey interests by protecting New Jersey residents from dubious securities that enter the state in the secondary market.” Maj. Op. at 788. Yet, § 60 does not do that. Goldmen can solicit sales of Imatec shares to institutional buyers, and other broker-dealers no matter where they are located. Similarly, he can sell these shares to individuals in New Jersey and elsewhere so long as he does not solicit the buyer. Once any such sales occur, the shares are in the secondary market and Goldmen is no longer restrained by.§ 60.2
*793II.
The Supreme Court “has adopted what amounts to a two-tiered approach to analyzing state economic regulation under the Commerce Clause.” Brown-Forman Distillers Corp. v. New York State Liquor Authority, 476 U.S. 573, 578-79, 106 S.Ct. 2080, 90 L.Ed.2d 552 (1986). “When a state statute directly regulates or. discriminates against interstate commerce, or when its effect is to favor iri-state economic interests over out-of-state interests, [the Supreme Court] has generally struck down the statute without further inquiry.” Id. at 579, 106 S.Ct. 2080. “When, however, a statute has only indirect effects on interstate commerce and regulates evenhandedly,. [the Court] has examined whether the State’s interest is legitimate and whether the burden on interest commerce clearly exceeds the local benefits.” Id. (citing Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970)).
Although I believe a strong case can be made that § 60 falls within the first tier of inquiry and therefore could be struck down as a per se violation of the Commerce Clause, I think our inquiry should, more appropriately, be conducted under the Pike balancing test that guides inquiry under the second tier.3
Although the majority does not directly refer to Pike v. Bruce Church, it is obvious that, by discussing New Jersey’s local interests, it is engaging in a balancing of interests as required by Pike. In Pike, the Court wrote:
Where the statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the local putative benefits. If a legitimate local purpose is found, then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the. local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities. Occasionally the Court has candidly undertaken a balancing approach in resolving these issues, but more frequently it has spoken in terms of “direct” and “indirect” effects and burdens.
397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970).
Moreover, a state cannot impose its regulatory scheme on another state in an effort to “control conduct beyond the boundaries of the state.” Healy v. Beer Institute, 491 U.S. 324, 326, 109 S.Ct. 2491, 105 L.Ed.2d 275 (1989). This prohibition against extraterritoriality “reflect[s] the Constitution’s special concern both with the maintenance of a national economic union unfettered by state-imposed limitations on interstate commerce and with the autonomy of the individual states with their respective spheres.” Id. The Supreme Court has summarized the application of the limitations inherent in the Commerce Clause as follows:
[O]ur cases concerning the extraterritorial effects of state economic regulation stand at a minimum for the following propositions: First, the Commerce Clause ... precludes the application of a state statute to commerce that takes place wholly outside of the State’s borders, whether or not the commerce has effects within the State____ Second, a statute that directly controls commerce occurring wholly outside the boundaries of a State exceeds the inherent limits of the enacting State’s authority and is invalid regardless of whether the statute’s extraterritorial reach was intended by the legislature. The critical inquiry is whether the practical effect of the regulation is to control conduct beyond the boundaries of the State. Third, the practical effect of the statute must be evaluated not only by considering the consequences of the statute itself, but also by considering how the challenged statute may interact with the legitimate regulatory regimes of other States and what effect would arise if not one, but many or every, State adopted similar legislation. Generally speaking, *794the Commerce Clause protects against inconsistent legislation arising from the projection of one state regulatory regime into the jurisdiction of another.
Id. at 336-37, 109 S.Ct. 2491 (citations and internal quotations omitted).
I agree that Goldmen’s telephone solicitation of out-of-state buyers for shares of Ima-tec would not be a transaction occurring “wholly outside” of New Jersey. However, the majority’s view that the Bureau is only regulating its “half’ of a transaction by prohibiting Goldmen from soliciting out-of-state buyers, see Maj. Opn. at 787, is accurate in theory, but not accurate in the jurisprudential reality of the Commerce Clause. Gold-men is not the issuer of these securities. It is only the underwriter. Imatec, a Delaware corporation whose main office is in New York, is the issuer. Imatec’s only connection with New Jersey is that its offering was underwritten by a broker-dealer who happens to be located there, and that broker dealer planned to solicit out-of-state sales from its New Jersey office. It may be reasonably assumed that out of state buyers would purchase these shares from funds held in financial institutions outside of New Jersey, and that any profits would be deposited into those same financial institutions. Moreover, the growth and fiscal strength of Ima-tec, the Delaware corporation, is related to the value of its shares. Thus, New Jersey’s only connection with this interstate transaction lies in the fortuitous circumstance that a broker-dealer would be sitting at a desk somewhere in New Jersey making telephone calls to residents of the 16 states where Imatec securities are appropriately registered and authorized for purchase.
Goldmen has satisfied the registration requirements of 16 states and those states allow their residents to be solicited to purchase shares of Imatec. Each of those states could have enacted a regulatory scheme that only allowed the sale of securities properly registered in the state where the seller maintains its principal office. None of the 16 states have chosen to do so. Our holding has the practical effect of reading § 60 into the regulations of each of those states despite the absence of such a restriction in the regulatory schemes of the 16 states. The majority concludes that this result is consistent with the Commerce Clause because it furthers two “particularly strong” local interests, viz., preserving the reputation of New Jersey broker-dealers and protecting New Jersey buyers in the secondary market. Maj. Opn. at 787-89. My colleagues can reach this conclusion by viewing § 60 as having only an “incidental” impact on interstate commerce. As I state above, § 60 imposes an absolute ban on interstate commerce that consists of soliciting individual buyers of Imatec stock from New Jersey. If we analyzed the regulation from the perspective of that absolute ban on the solicited sale of Imatec securities to residents of the states where the securities have been approved for sale, the burden on interstate commerce would be far more substantial than the majority suggests.
However, even assuming arguendo that the regulations at issue here have only an “incidental” effect on interstate commerce, New Jersey’s interest is still not sufficient to justify prohibiting solicitations in 16 states where these securities are registered. I believe that finding such an interest requires more than the asserted need to protect potential purchasers residing elsewhere from the risks of penny stocks and sellers such as Goldmen. It requires some showing that the interests New Jersey seeks to further would be advanced by applying § 60 to solicitations of Imatec. If the Bureau can establish that Goldmen is engaging in false and misleading sales practices or fraud, New Jersey has an interest sufficient to survive scrutiny under the Commerce Clause. But, the Bureau concedes that “[tjhis is not a fraud case.” App. at 558. Therefore, I am at a loss to understand how the majority can conclude on the record before us that New Jersey has shown a “particularly strong” interest.
Since New Jersey’s interest absent fraudulent business- activities is minimal at least, the federal interests are paramount. It is not a question of allowing one state’s regulatory scheme to prevail over that of another state. “The balance here must be struck in favor of the federal interests.” Kassel, 450 U.S. at 667, 101 S.Ct. 1309. Accordingly, I *795believe we should affirm the decision of the district court.
. Hall v. Geiger-Jones Co., 242 U.S. 539, 37 S.Ct. 217, 61 L.Ed. 480 (1917), Caldwell v. Sioux Falls Stock Yards Co., 242 U.S. 559, 37 S.Ct. 224, 61 L.Ed. 493 (1917) and Merrick v. N.W. Halsey & Co., 242 U.S. 568, 37 S.Ct. 227, 61 L.Ed. 498 (1917).
. The Bureau takes the position that individuals who make an unsolicited offer to buy from Gold-men, and institutional buyers and other broker-dealers are better informed. The Bureau reasons that extremely risky securities will, therefore, not enter New Jersey via the secondary market as they won't be sold in the first place. However, these better informed buyers may well purchase shares of even the riskiest stock based upon a belief that the risk is offset by the selling price, and the potential for greater profit. For a discussion of the various theories of how risk, information about an issuer, and potential profit are factored into the selling price of shares of stock, see Robert G. Newkirk, Comment, Sufficient Efficiency: Fraud on the Market in the Initial Public Offering, 58 U. Chi. L.Rev. 1393 (1991).
. The Supreme Court has "recognized that there is no clear line separating the category of state regulation that is virtually per se invalid under the Commerce Clause, and the category subject to the Pike v. Bruce Church balancing approach.” Brown-Forman Distillers Corp. v. New York State Liquor Authority, 476 U.S. at 578-79, 106 S.Ct. 2080. "In either situation the critical consideration is the overall effect of the statute on both local and interstate activity.” Id.