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Raising Funds Via The Radio?

Having trouble raising that next fund? Then perhaps it’s time you hit the airwaves, with a radio ad asking listeners to invest. Maybe you could even come up with a clever jingle…

I know what you’re thinking: “That’s illegal solicitation, and the SEC would be on us before the thirtieth second.”

And I’d normally agree with you, save for an unusual item in this morning’s Commercial Mortgage Backed Alert. It describes a firm called Wilshire Finance Partners, which next month will run radio ads for a $100 million-targeted fund that would originate bridge loans on commercial properties in California. The trade pub writes:

“Fund operators normally are prohibited from publicly advertising their vehicles. But under California securities regulations, fund operators can do so if marketing campaigns are limited to California investors.”

Now this obviously raises lots of questions. What if the radio signal bleeds into a neighboring state? What if a New York resident is vacationing in California, and hears the ad? What if Wilshire advertises on a station that streams its content online, so that it can be heard worldwide? What if this California-only regulation is a loophole never intended for a firm like Wilshire?

I don’t yet have answers to any of the above, and can’t quite imagine a semi-successful firm turning to Top 40 listeners for its next fund commitment. But if you’re among the walking dead and are willing to create some sort of Golden State vehicle, this might be your last best hope.