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Regulation and Compliance > Federal Regulation > FINRA

FINRA Bars Rep, BD for Misleading Private Placement Investors

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The Financial Industry Regulatory Authority has barred a well-known seller of tenant-in-common exchanges, Tony Thompson, and his broker-dealer, TNP Securities, from the industry. 

“Enforcement argues that restitution is required because ‘[a]s a result of the respondents’ misconduct, every investor that purchased any of the notes issued by the Guaranteed Notes LLCs after January 1, 2009, was misled, and, at a minimum, has unjustly suffered the loss of the principal amount of their investment,” FINRA said in the order released Monday.

According to FINRA, Thompson raised about $50 million through sales of private-placement securities between 2008 and 2012 but made “material misrepresentations and omissions” to investors in these sales. In addition, TNP Securities failed “to supervise offerings of private-placement securities,” the regulatory group says.

“Respondents’ contentions are unavailing,” FINRA said, noting that evidence showed Thompson had been in charge of the marketing for three offerings —12% Notes, P Notes and PPP Notes – which allegedly contained “material misrepresentations and omissions.”

“He knew but failed to disclose their precarious financial condition when he participated in the preparation and authorized the distribution of the initial offering materials and the numerous supplements,” it continued.

Thompson, who first registered with FINRA in 1972, defended himself by arguing 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 order.

However, FINRA disagreed, stating: “The record documents Thompson’s rejection of counsel’s solicitation to P Notes investors.”

Furthermore, the panel noted that it rejected “Thompson’s contention that he relied on his lawyers and accountants for the accuracy of these [P Notes’] figures; Thompson was ‘aware of and monitored, on an ongoing basis,’ the financial status of P Notes LLC.”

Still, FINRA did not require Thompson to repay investors for their losses, stating that it found “insufficient basis” for the claim that his misstatements and ommissions caused the investor losses. The advisor was, however, asked to cover nearly $6,100 for the proceedings.

— Check out Distressed Diva Tilton Girds for SEC Battle Over Complex Loans on ThinkAdvisor.


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