Finra looking into why his brokerage allegedly failed to turn over requested documents
Troubles are mounting for noted real estate investor Tony Thompson. The Financial Industry Regulatory Authority Inc. is investigating him and his broker-dealer, TNP Securities LLC, for failing to turn over documents, thus potentially breaking its rules.
Mr. Thompson already is facing significant financial hurdles, most notably the default last year on $21.5 million of private notes he sold in 2008 and 2009 to raise money for his latest venture, Thompson National Properties LLC.
Mr. Thompson also allegedly violated standards of commercial conduct and fair principles of trade, according to his BrokerCheck report.
The broker-dealer he owns, TNP Securities, meanwhile, also is under Finra investigation for alleged violations of the same rules. Finra's investigation of the broker-dealer focuses on its failure “to produce a privilege log for approximately 316,000 attorney-client-privilege e-mails.”
If an executive asserts attorney-client privilege, he or she has to create a log listing all relevant documents, industry attorneys said.
In an e-mail to InvestmentNews last week, Mr. Thompson wrote: “The biggest challenge [is logging] 316,000 attorney-privileged e-mails, which would take one person potentially a few years” to create. When asked what Finra was looking for, Mr. Thompson wrote: “Don't know.”
Finra spokeswoman Nancy Condon declined to comment.
According to the BrokerCheck reports, Finra in January made the inquiries regarding the documents. At that time, Mr. Thompson was attempting to promote sales of a nontraded real estate investment trust, the $272 million TNP Strategic Retail Trust Inc.
That month, Mr. Thompson sent a note to broker-dealers hawking the REIT, stating that its net asset value was 6% higher than its share price. Such a discrepancy between a REIT's selling price and its NAV could be dilutive to shareholders and provide brokers with a sales pitch laden with urgency.
TENANT-IN-COMMON DEALS
Mr. Thompson, chief executive of Thompson National Properties, launched his firm in 2008. Earlier, he founded Triple Net Properties LLC, which packaged real estate investments called tenant-in-common exchanges, which were sold through independent broker-dealers during the real estate bubble.
In 2007, a related company, NNN Realty Advisors Inc., merged with Grubb & Ellis Co. Burdened by debt, that once-iconic commercial real estate company filed for bankruptcy protection last February and then sold its remaining assets for $30 million.
