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SANTA ANA, CA-The Securities and Exchange Commission has closed the books on an investigation into the filing practices of Triple Net Properties that began three years and nine months ago and cost Triple Net “north of $5 million,” according to Tony Thompson, founder of the the Santa Ana-based tenant-in-common sponsor. Thompson and Grubb & Ellis Co., which merged with Triple Net last year, both issued statements today expressing their relief that the investigation is over and that the SEC determined that no enforcement action was necessary.

Thompson, who left his post as chairman of Grubb & Ellis last year and has since founded Thompson National Properties LLC, tells GlobeSt.com that the investigation began when the SEC, in the course of routine compliance audits, found that Triple Net had not filed some required documents on time for some of its funds or had not included all required information in those filings during the period 2002 to 2004. “They found just enough little things that concerned them that they went from a compliance audit to an enforcement investigation,” Thompson explains.

Thompson says the $5 million in hard costs for Triple Net included more than $1 million for copying paper documents alone, plus millions more for attorneys’ fees, accounting fees and other expenses. The inquiry also cost Triple Net in terms of time that company employees spent gathering documents and performing other tasks associated with the investigation.

In addition to the direct costs, Thompson says, the investigation “did impede us in raising funds with some of our broker-dealers” because the TIC sponsor was a subject of an SEC investigation. “We were very successful at Triple Net Properties…but we could have raised even more if that investigation had not been hanging over our head,” Thompson says.

In his statement regarding the SEC’s decision not to take any enforcement action, Thompson commented, “I certainly agree with the SEC’s conclusion and thank everyone involved for their continued cooperation and support throughout this laborious process.” Scott Peters, CEO of Grubb & Ellis Co., issued a statement saying, “The company cooperated fully with the SEC staff throughout the investigation, and we couldn’t be more pleased with the successful outcome.”

According to Thompson, the active investigation went on for about a year and three quarters, after which the SEC stopped asking for documentation and started negotiating a settlement. For the past year and a half, the company pretty much had an outline of a settlement with the L.A. office off the SEC, but the settlement was delayed by staff changes and a heavy workload at the SEC’s Washington, DC office.

Thompson calls the no-enforcement ruling “a very good resolution,” especially since there was a time when Triple Net thought that it might have to pay a six-figure fine. “It was a very laborious process, and we’re very relieved to have it over with,” he says. “There are many loyal, capable people both inside and outside the company who I owe thanks to for sacrificing many hours, in addition to their regular job responsibilities, to take on the extra burdens associated with this.

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