Tony Thompson barred from securities industry

Finra said he misrepresented $50 million private offering that later went into default

Apr 2, 2015 @ 1:56 pm

By Bruce Kelly

(Correction: An earlier version of this story incorrectly stated that Finra had ordered Tony Thompson to repay $36.2 million to investors as restitution, and suggested that TNP Securities also was required to repay investors $3.4 million in restitution. In fact, Finra did not order either Mr. Thompson or TNP to pay any restitution. IN regrets the error. The story here has been corrected.)

Tony Thompson, the leading seller of private real estate investments known as tenant in common exchanges a decade ago before the real estate crash, has been barred from the securities industry.

Mr. Thompson “made material misrepresentations and omissions in the sale of private placement securities to investors” in violation of securities industry rules, according to the Financial Industry Regulatory Authority Inc.

Finra alleged in July 2013 that Mr. Thompson deceived and defrauded investors who bought $50 million in high-yield promissory notes sponsored by a broker-dealer he owned, TNP Securities. The notes later missed payments and went into default.

(More: BrokerCheck report with initial allegations)

Finra originally wanted Mr. Thompson to pay $36.2 million in restitution to clients. According to an administrative order from Monday, Finra later found that there was an “insufficient basis” that investors' losses in Mr. Thompson's private placements were caused by the very misstatements and omissions that wound up causing him to be booted from the securities industry. Instead, he was assessed costs of $6,082.04 for the administrative proceeding.

TNP Securities was also expelled under Monday's Finra order.

TNP Securities was the wholesaler for Mr. Thompson's various products, including the private placements at the center of Finra's decision to bar him. TNP did not disclose, for example, the firm's negative equity of $18 million in the private placement offering documents, according to the Finra order.

Mr. Thompson “still does not accept responsibility” for his misconduct prior to its detection by Finra, according to the order. “He insists that he 'didn't do anything intentionally wrong, never have, never will,'” according to the Finra order.

In his defense before Finra, Mr. Thompson argued that he could not be held liable for deficiencies in the various note programs because he, along with his broker-dealer, relied on a team of highly qualified professionals, including an attorney who was the driving force as to what to include in the private placement offering documents, according to the Finra order.

“While acknowledging that he, as chief executive of TNP, was the person ultimately responsible for information included and omitted from offering materials, he maintains that the misrepresentations and omissions resulted from his good-faith reliance on information and advice he received from others, particularly his accountants and counsel,” according to the Finra order.

Finra batted away that notion. According to the Finra order, Mr. Thompson “exercised editorial control over the offering materials” for the private placements. “The e-mails show Thompson's immersion in details related to the materials; his decisive executive style; and even his readiness to reject, rather than rely upon, advice of counsel concerning disclosures.”

Mr. Thompson, who has been a licensed securities professional since 1972, did not return a call left at Thompson National Properties, his real estate manager, on Thursday afternoon. In an email to InvestmentNews, he said he would have a comment on Friday.

By barring Mr. Thompson, Finra makes it almost impossible for him to raise money for any further private real estate deals by selling his securities through independent broker-dealers, a handful of which have sold his products for years.

Being barred from the securities industry is a fall from grace for Mr. Thompson, who 10 years ago was the undisputed packer and seller of tenant in common exchanges, or TICs.

Before launching TNP Securities in 2008, Mr. Thompson founded Triple Net Properties, which packaged TICs and sold them through independent broker-dealers during the real estate bubble.

A related Thompson company, NNN Realty Advisors Inc., in 2007 merged with Grubb & Ellis Co. Burdened by debt, that once-iconic commercial real estate company later filed for bankruptcy protection in 2012 and then sold its remaining assets for $30 million.


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