The Financial Industry Regulatory Authority (FINRA) filed a complaint on July 30 against real estate investor Tony Thompson, alleging that he deceived and defrauded investors who bought $50 million in high-yield promissory notes sponsored by Thompson National Properties LLC.
Thompson is well known in the independent-broker-dealer industry for his real estate deals, including 1031, or “tenant in common,” exchanges. He launched Thompson National Properties in 2008, raising $250 million from investors via a series of real estate-related offerings. Among them is a now-struggling non-traded real estate investment trust, TNP Strategic Retail Trust Inc., which eliminated dividends to investors this year.
FINRA’s complaint focuses on the level of disclosure regarding financial difficulties at Thompson National Properties in the PPMs, said Thompson’s lawyer, Thomas Fehn, in an Aug. 6 article by Investment News. Fehn contends those issues were appropriately disclosed.
According to the complaint, Thompson National Properties had provided a purported guarantee of principal and interest for three notes programs sold from 2008 to 2012 through a network of independent broker-dealers. TNP Securities LLC, which is Thompson’s broker/dealer, also named in the complaint.
The three note programs in FINRA’s complaint include the TNP 12% Notes Program LLC, the TNP 2008 Participating Notes Program LLC and the TNP Profit Participation Program LLC.
As reported in the Aug. 6 story by Investment News, Thompson’s profile on Finra’s BrokerCheck system states that TNP Securities and Thompson “engaged in transactions, practices or courses of business which operated as a fraud or deceit upon the purchaser” of the note securities. In FINRA’s complaint, one of those series of private notes is reported to be in default, while two others have stopped making payments to clients.
Thompson and TNP Securities are allegedly in violation of Securities and Exchange Act of 1934, as well as FINRA’s Rule 2020, which prohibits the use of manipulative, deceptive or other fraudulent devices by registered representatives and broker-dealers. They are also allegedly in violation of FINRA Rule 2010, which requires registered reps and broker-dealers to adhere to high standard of commercial honor and trade.
Thompson and TNP Securities are no strangers to FINRA. Both have been on the regulator’s radar for some time now over allegations of failing to cooperate in a FINRA investigation.