The White Law Group, LLC, a South Florida securities fraud, broker fraud, securities arbitration, investor protection and Chapter 7 bankruptcy law firm based in Boca Raton, Florida.

Posts tagged ‘TNP Strategic Retail Trust losses’

More Bad News for Thompson National Properties

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.

Update on Thompson National Properties Investigation

According to Investment News one of the reportable events is “related to the REIT making prepayments of acquisition and financing fees to its adviser, TNP Strategic Retail Advisors LLC, which is controlled by Mr. Thompson.” It appears that McGaldrey identified the finincial discrepancy, but still failed to report the event to the SEC.

The TNP REIT has experienced numerous difficulties that appear to stem from co-chief executive and chairman of the board, Tony Thompson. As reported in our earlier post (here), Mr. Thompson is under investigation by the Financial Industry Regulatory Authority (FINRA) for allegedly failing to produce a “privileged log” requested by FINRA.

The White Group continues to follow the TNP and Tony Thompson investigation on behalf of investors. It appears that investors in TNP REIT and TNP 12 percent notes may have suffered substantial losses and The White Law Group is investigating the liability that brokerage firms that sold TNP 12 Percent Notes and TNP REIT may have for failure to perform adequate due diligence on these offerings.

TNP Strategic Retail Trust cuts dividend.

According to a recent SEC filing, because of loan compliance issues with its lenders, TNP Strategic Retail Trust Inc. will not pay a dividend in the first quarter of 2013 and may not pay any type of distribution for 2013.

Based on reports, short-term liquidity issues, including an accelerated maturity date of loans, lender fees and the cost of potential litigation with lenders, are the cause of the cut in distributions for the REIT, which has $272 million in assets.

The SEC filing also stated that one of the REIT’s lenders, Torchlight Investors LLC, is blocking the REIT from naming a new adviser, Glenborough LLC.

This news comes shortly after Tony Thompson, the head of TNP Strategic Retail Trust and Thompson National Properties, sent a note to brokerage firms promoting the REITs strong outlook.  Specifically, Mr. Thompson apparently stated that its net asset value was 6% higher than its share price (Such a discrepancy between a REIT’s selling price and its Net Asset Value, or NAV, could be dilutive to shareholders and provide brokers with a strong sales pitch).

The White Law Group continues to investigate the liability that brokers-dealers may have for making unsuitable investment recommendation and misrepresenting the risks of non-traded REITs like TNP Strategic Trust.

Broker-dealers have a fiduciary duty to perform adequate due diligence on any investment. The Financial Industry Regulator Authority (FINRA) requires that broker-dealer fully disclose all the risk in any investment when making recommendations, and ensure that the investment is suitable given their clients age, risk tolerance, financial objectives, net worth, and investment experience.

If you feel that your broker-dealer misrepresented TNP Strategic Retail Trust or another investment offering with Thompson National Properties, the securities attorneys of The White Law Group may be able to help you recover your losses through FINRA Arbitration. For a free consultation please call The White Law Group at 312-238-9650.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.

To learn more about The White Law Group, visit http://www.whitesecuritieslaw.com

Update on Securities Fraud Investigation Involving TNP Strategic Retail Trust and Thompson National Properties Investments

Have you suffered investment losses in TNP Strategic Retail Trust or a Thompson National Properties investment? If so, the following information may be of assistance to you.

TNP Strategic Retail Trust, Inc is a non-traded REIT sponsored by Thompson National Properties, LLC and launched in 2008. According to their website, TNP Strategic Retail Trust primarily invests in income producing retail properties throughout the Western United States, and in real estate assets such as mortgages, mezzanine, bridge, and other commercial real estate loans. “TNP Strategic Retail Trust has acquired 21 shopping centers in 14 states containing approximately 2.2 million square feet at an overall purchase price of more than $290 million since November 2009.” As of January 11, 2013, the REIT has issued 10,944,230 shares of common stock from the initial public offering of 100 million common shares.

The TNP Strategic Retail Trust is organized as an UPREIT and operates through an operating partnership, TNP Strategic Retail Operating Partnership, LP.  According to the prospectus, the advisory company, TNP Strategic Retail Advisor, LLC, selects investments for the REIT based on specific investment objectives and criteria approved by the board of directors.

The term UPREIT is short for Umbrella Partnership Real Estate Investment Trust. The UPREIT structure allows owners of commercial real estate property to form a REIT by combining the properties from existing limited partnerships.  By transferring property to the operating partnership, as opposed to selling directly to the REIT, property owners exchange the property for limited partnerships units and are able to put off capital gains taxes.

According to TNP Strategic Retail Trust’s website, the “UPREIT structure gives us an advantage in acquiring desired properties from persons who may not otherwise sell their properties because of unfavorable tax results.”

However, many concerns have been raised about the future of TNP Strategic Retail Trust as a result of several major changes the REIT has gone through in 2013.

January alone was an active month for TNP Strategic Retail Trust. According to SEC Filings, the REIT announced that they “may not be in compliance with certain provisions related to two secured loans totaling approximately $67.2 million.”  As a result of the loan default the redemption program was suspended, and distributions were reduced to quarterly payments as opposed to monthly payments. In addition, the REIT is actively negotiating with Glenborough, LLC to become their new advisor.

February 7, 2013 marked the end of TNP Strategic Retail Trust initial offering with 88,966,650.25 common shares unsold. Since then, TNP has withdrawn a proposed follow-on public offering of $900 million in common stock due to current market conditions.

According to TNP Strategic Retail Trust’s website, as of November 9, 2012, the board of directors estimated the value of common stock at $10.60. Unfortunately, it is unlikely that investors would be able to sell their shares for the estimated value because of the lack of a secondary market. The prospectus notes that “You should not rely on the estimated value per share as being an accurate measure of the current value of our shares of common stock or in making an investment decision.”

Some of the risk factors discussed in the prospectus are listed below:

• “We may incur debt exceeding 75% of the cost of our assets in certain circumstances.”
• “There is no trading market for shares of our common stock and we are not required to effectuate a liquidity event by a certain date. As a result, it will be difficult for you to sell your shares of common stock and, if you are able to sell your shares, you are likely to sell them at a substantial discount.
• “You may be more likely to sustain a loss on your investment because our sponsor does not have as strong an economic incentive to avoid losses as does a sponsor who has made significant equity investments in its company.”
• “All of our cash distributions to date have been made from proceeds from this offering. Distributions are not guaranteed, may fluctuate, and may constitute a return of capital or taxable gain from the sale or exchange of property.”
• “To date, all of our cash distributions paid have been made from offering proceeds and constituted a return of capital.”

The lack of liquidity and secondary market are inherent problems of non-traded REITs.  Despite the numerous risks many broker-dealer may have misrepresented TNP Strategic Retail Trust to clients.

Non-traded REIT’s offer extremely high sales commission to broker-dealers. TNP offers 7% sales commission, which is 3 to 4 times higher than more tradition investments sold on stock exchange.  This higher commission may explain broker-dealers motive for recommending this investment to unsuitable investors.

The White Law Group continues to investigate the liability that brokers-dealers may have for making unsuitable investment recommendation and misrepresenting the risks of non-traded REITs like TNP Strategic Trust.

Broker-dealers have a fiduciary duty to perform adequate due diligence on any investment. The Financial Industry Regulator Authority (FINRA) requires that broker-dealer fully disclose all the risk in any investment when making recommendations, and ensure that the investment is suitable given their clients age, risk tolerance, financial objectives, net worth, and investment experience.

If you feel that your broker-dealer misrepresented TNP Strategic Retail Trust or another investment offering with Thompson National Properties, the securities attorneys of The White Law Group may be able to help you recover your losses through FINRA Arbitration. For a free consultation please call The White Law Group at 312-238-9650.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.

To learn more about The White Law Group, visit http://www.whitesecuritieslaw.com

More bad news for Thompson National Properties Investors?

According to reports, FINRA is investigating Tony Thompson and his broker-dealer, TNP Securities LLC, for failing to turn over documents to FINRA.  By failing to turn over documents to FINRA, Mr. Thompson allegedly violated industry rules that require firms and individuals to produce information upon request. Mr. Thompson’s FINRA Broker Report also indicates that he also allegedly broke rules requiring high standards of commercial conduct and fair principles of trade.

This isn’t the first report of trouble for Tony Thompson.  Mr. Thompson is also reportedly 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.

TNP Securities is also under FINRA investigation for alleged violations of rules. FINRA’s investigation of the TNP Securities is focused on the firm’s failure “to produce a privilege log for approximately 316,000 attorney-client privilege e-mails.” (A privilege log is a list of documents sent between an attorney and client which are asserted as exempt from discovery because of the attorney-client privilege).

According to the BrokerCheck reports, FINRA in January made the inquiries regarding the documents around the same time that Mr. Thompson was attempting to sell shares in TNP Strategic Retail Trust Inc (a non-traded REIT).

The White Law Group continues to investigate potential FINRA arbitration claims involving Thompson National Properties investments, including TNP Strategic Retail Trust and the TNP 12% Notes Program (the TNP 12% Notes Program LLC suspended interest payments to investors in July 2012).

Brokerage firms have a fiduciary duty to perform due diligence on any investment prior to offering it for sale to its clients.  Broker dealers also are obligated to ensure that any recommendation it makes is appropriate in light of the investor’s age, investment experience, net worth, and investment objectives.  Based on the information now known about several of the Thompson National Properties offerings, it appears that the firm’s that recommended these investments to their clients may have done so improperly.

If you believe that you have suffered losses as a result of your investment in a Tony Thompson or Thompson National Properties offering, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.