Haselkorn & Thibaut wins DST investor settlement in FINRA arbitration

Haselkorn & Thibaut, P.A. says it secured a confidential settlement for an investor in a Delaware Statutory Trust loss dispute tied to a 1031 exchange strategy. The case, resolved through FINRA arbitration, highlights the risks, liquidity limits and supervision issues that can surround DST products.

Why it matters: - The settlement adds to the growing number of disputes over Delaware Statutory Trust investments used in 1031 exchanges. - DST investors can face limited liquidity, reduced control and distribution problems if the product underperforms. - The outcome underscores the duties broker-dealers and financial professionals have when recommending complex products to retail investors.

What happened: - Haselkorn & Thibaut, P.A., operating as Investment Fraud Lawyers, announced a successful settlement for an investor who reported losses in a Delaware Statutory Trust investment. - The matter was resolved in FINRA Case No. 25-02063. - The arbitration process was completed and the settlement terms remain confidential. - The investor alleged that the DST’s risks, liquidity limits and other material considerations were not adequately addressed before, during or after the recommendation.

The details: - The dispute involved the recommendation, sale and oversight of a DST transaction tied to a 1031 exchange strategy. - DSTs are investment vehicles that allow investors to acquire beneficial interests in institutional real estate. - DSTs are commonly used with Section 1031 exchanges, which may allow investors to defer capital-gains taxes after selling investment property. - DST investors generally give up management authority and face limits on liquidity, refinancing and control over the underlying properties. - The firm said DST investors may also face suspended or reduced distributions, debt maturity challenges or sponsor-issuer litigation. - Haselkorn & Thibaut said it continues to review claims involving complex investment products, including various DST programs and sponsors. - The firm offers free and confidential evaluations for investors who suffered losses, distributions interruptions or liquidity concerns in DSTs or other complex products. - Many claims are handled on a contingency-fee basis, meaning legal fees are not owed unless there is a recovery.

Between the lines: - Matthew R. Thibaut said DST investments can be highly complex and may not be known or appropriate for some investors. - Thibaut also said financial professionals and brokerage firms have important obligations when evaluating, recommending and supervising these products. - The announcement frames the settlement as both a client win and a broader example of how DST sales can create compliance risk if disclosures or supervision fall short. - Haselkorn & Thibaut also said it evaluates each case individually to determine whether the firm, advisor or another party failed to meet industry standards. - The firm said it represents investors in claims involving broker misconduct, unsuitable recommendations, inadequate due diligence, failure to disclose material risks and Regulation Best Interest violations. - Since June 2020, Reg BI has required broker-dealers and financial professionals to act in retail customers’ best interests when making recommendations and to disclose material risks, costs and conflicts.

What's next: - Haselkorn & Thibaut said it will continue investigating DST-related claims involving reduced distributions, debt maturity issues and sponsor-level litigation. - Investors who believe they lost money in a DST or 1031 exchange can seek a free consultation through Investment Fraud Lawyers. - The firm lists a phone number for inquiries at 1-888-885-7162 and directs investors to Investment Fraud Lawyers.

The bottom line: - The settlement shows that DST-related investor disputes can be resolved through FINRA arbitration, but the underlying sales and supervision issues often remain at the center of broader investor-protection claims.