According to reports, a former chief financial officer of Thompson National Properties was recently suspended for five months from the securities industry for failing to conduct adequate and independent due diligence into an array of Thompson’s real estate deals.
According to a FINRA Order, FINRA recently suspended Wendy J. Worcester, who was also co-chief compliance officer of the broker-dealer controlled by Mr. Thompson, TNP Securities LLC, from working with a Finra broker-dealer and fined her $15,000.
The Order alleges that Ms. Worcester “failed to conduct adequate and independent” due diligence regarding three separate private-placement offerings sponsored by Thompson National Properties LLC. FINRA further alleged, according to the reports, that she “thus compromised the independence” of the broker-dealer, TNP Securities.
The Order further states that in 2009 Thompson National Properties was allegedly hurting for cash, posting losses that year of almost $25.8 million, and that this resulted in negative net equity of $13.6 million for the firm, which was in the middle of launching its REIT, the TNP Strategic Retail Trust Inc. FINRA further alleges that two of the Thompson private placements, both note programs, paid old investors with new investor money or money from elsewhere in the operation.
The Order specifically states that “[d]uring 2009 and 2010, the [TNP 12% Notes Program LLC and TNP Participating Notes Program LLC] were unable to pay certain investor distributions from operating cash flow,” and that, instead, they “relied on new investor proceeds or transfers of cash from [Thompson National Properties] or its affiliates in order to make distributions to investors.”
Upon information and belief, both these note programs are now in default.
According to the Finra order, Ms. Worcester consented to it without admitting or denying its allegations. Finra is also apparently conducting an investigation into Mr. Thompson and TNP Securities for failing to hand over a log of more than 300,000 e-mails to the firm’s attorney. Earlier this year, the REIT suspended the payment of dividends to investors.
The White Law Group has been monitoring this situation for some time. Based on what is now known about the Thompson National Properties offerings – TNP Strategic Retail Trust, TNP 12% Notes Program, and TNP Participating Notes Program – it appears that the brokerage firms that sold these investments may be liable for any losses due to their failure to perform adequate due diligence on these offerings.
Brokerage firms have a fiduciary duty to their clients to perform adequate due diligence on any offering before offering it for sale to their clients. For more information on The White Law Group’s investigation into potential FINRA arbitration claims involving these products, visit http://www.whitesecuritieslaw.com/2013/03/20/tnp-strategic-retail-trust-cuts-dividend/ or http://seekingalpha.com/instablog/1047207-d-daxton-white/1662781-information-for-tnp-strategic-retail-trust-and-thompson-national-properties-investors
For a free consultation with a securities attorney regarding your TNP litigation options, please call The White Law Group’s Chicago office at 312/238-9650.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.