According to media reports, the Financial Industry Regulatory Authority, Inc. (“FINRA”) filed a complaint against well-known real estate investor Tony Thompson, owner of Thompson National Properties LLC (“Thompson National Properties”), and his broker-dealer, TNP Securities LLC (“TNP Securities”), for allegedly deceiving and defrauding investors who purchased at least $50 million in high-yield real estate promissory notes sponsored by Thompson National Properties. Reports indicated that the FINRA Complaint alleges that Thompson National Properties sold three note programs, known as the TNP 12% Notes Program LLC, the TNP 2008 Participating Notes Program LLC and the TNP Profit Participation Program LLC, from 2008 through 2012, through various independent broker-dealers. Reportedly, the FINRA Complaint states that Thompson National Properties incurred losses due to the decline in value of the equity of the note programs and that the losses were not disclosed to investors in the promissory note’s offering documents or private-placement memorandum. News reports made the following quotes from the FINRA Complaint, “Consequently, by no later than Jan. 1, 2009, the increasing operating losses and declines in total equity that [Thompson National Properties] suffered comprised material changes on the financial condition of [Thompson National Properties] that only worsened as time went on . . . During the offering periods for 12% Notes and 2008 Participating Notes, losses in 2009 of [$25.6 million] took the company’s equity to [-$13.6 million].” Reportedly, the FINRA Complaint alleges that Mr. Thompson and TNP Securities violated the Securities and Exchange Act of 1934, FINR Rule 2020, which prohibits manipulative, deceptive or other fraudulent devices by registered representatives and broker dealers, and FINRA Rule 2010, which requires registered representatives and broker dealers to act with a high standard of commercial honor and trade.
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