CAI Investments Daytona DST: Investor Lawsuit Investigation
Investors in CAI Investments Daytona DST may be exposed to significant risks tied to illiquidity, lack of control, and high commissions. The White Law Group is investigating whether brokerage firms unsuitably recommended this Delaware Statutory Trust to clients without properly disclosing its risks.
About the Offering
According to SEC filings, CAI Investments filed a Form D in 2018 to raise $6,440,235 through CAI Investments Daytona DST. The entity was structured as a Delaware Statutory Trust (DST), with Emerson Equity listed as the managing broker-dealer.
The filing disclosed significant sales incentives, including 6% selling commissions, a 1% dealer management fee, and an additional 1% allowance, plus wholesaling fees. These high upfront costs may have created conflicts of interest, incentivizing advisors to recommend the DST despite its risks.
CAI Investments, headquartered in Las Vegas, Nevada, is a vertically integrated real estate developer with projects across the United States.
Risks of DST Investments
DSTs are often marketed as attractive 1031 exchange opportunities offering passive income and tax deferral. However, they carry considerable disadvantages:
- Illiquidity – Investors may be unable to sell interests before the property is sold.
- Lack of Control – Investors cannot participate in decision-making about the property.
- Capital Limitations – DSTs cannot raise additional capital once closed, making it difficult to cover unexpected repairs or tenant vacancies.
- High Commissions – Large upfront fees reduce investor returns.
These factors make DSTs inappropriate for many investors unless carefully matched to financial goals and risk tolerance.
Broker Duties and Regulation Best Interest
Under Regulation Best Interest (Reg BI), broker-dealers are required to thoroughly evaluate investments and ensure recommendations are in the client’s best interest. If your advisor recommended CAI Investments Daytona DST without performing proper due diligence or without considering your financial profile, you may have grounds for a claim.
Recovery Options: FINRA Arbitration vs. Class Action
When investors suffer losses, they may consider joining a class action lawsuit or pursuing an individual FINRA arbitration. Typically, investors with losses over $100,000 are better served by arbitration, while class actions are more appropriate for consolidating smaller claims.
Free Consultation with a Securities Attorney
If you invested in CAI Investments Daytona DST and sustained losses, The White Law Group may be able to help. Our attorneys represent investors nationwide in FINRA arbitration claims.
For a free consultation with a securities attorney, call 888-637-5510 today.
Frequently Asked Questions (FAQs)
What is CAI Investments Daytona DST?
It is a Delaware Statutory Trust launched in 2018 to raise capital for a property investment in Daytona, Florida, structured for 1031 exchange investors.
Why are DSTs considered risky?
They are illiquid, offer investors no control, and cannot raise new funds if financial issues arise, making them vulnerable to property or tenant problems.
Can investors recover losses from CAI Investments Daytona DST?
Yes. If your advisor failed to conduct due diligence or recommended the DST inappropriately, you may be able to recover losses through FINRA arbitration.
