The Financial Industry Regulatory Authority, Inc. (“FINRA”) suspended Wendy J. Worcester, TNP Securities LLC’s (“TNP”) co-chief compliance officer, from associating with a FINRA broker dealer for five months, and fined her $15,000. According to FINRA, Worcester failed to adequately and independently conduct proper due diligence into TNP’s three private placement offerings. Two of TNP’s private placements paid old investors with new investor funds. According to FINRA, “[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 . . . [and instead] relied on new investor proceeds or transfers from cash from [Thompson National Properties, TNP’s affiliate that sponsored the private placements,] or its affiliates in order to make distributions to investors. Moreover, according to FINRA, Ms. Worcester had various roles at TNP and its affiliates, including working in compliance at TNP from May 2009 through October 2010, acting as Chief Financial Officer of TNP Strategic Retail Trust, which was a non-traded real estate investment trust (“REIT”) created by TNP’s founder, Tony Thompson. FINRA stated, Worcester did not “examine and reasonably evaluate historical and current financial statements of the issuer, [Thompson National Properties] and its affiliates, to identify and reasonably evaluate negative trends indicated by the financial statements and the requirements for significant capital infusions, increased revenues from operations or decreased expenses.”
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