Everest Kensington DST: Securities Investigation

Concerned about your investment in Everest Kensington DST?

Are you concerned about your investment in Everest Kensington DST? If so, the securities attorneys at The White Law Group may be able to help you by filing a FINRA Arbitration claim against the brokerage firm that sold you the investment.

Everest Properties, a real estate investment firm, has invested in limited partnerships that held real estate and other assets, according to its website.

According to SEC filings, the company filed a Form D to raise capital from investors in 2017 for the offering Everest Kensington DST. The entity type was a Delaware Statutory Trust, and the total offering amount was purportedly $10,300,000.

What is a DST Investment?

Delaware Statutory Trusts (DSTs) are generally offered as replacement property for accredited investors seeking to defer their capital gains taxes through the use of a 1031 tax deferred exchange and as straight cash investments for those wishing to diversify their real estate holdings.

The DST property ownership structure allows the smaller investor to own a fractional interest in large, institutional quality and professionally managed commercial property along with other investors, not as limited partners, but as individual owners within a Trust.

DST ownership essentially offers the same benefits and risks that an investor would receive as a single large-scale investment property owner, but without the management responsibility.

The Risks of Investing in DSTs

While there may be tax advantages to investing in a DST, there are several downside risks.

Like other real estate, a DST 1031 is considered an illiquid asset. Though you may be receiving cash flow, you won’t have access to any proceeds until the asset is sold, and the program concludes, which could involve a span of 7-10 years or more.

1031 DSTs cannot raise new capital once the investment is made leaving investors holding the bag if expensive repairs are needed or other issues arise – like a drop in occupancy or rental income.

Further, investors in a DST have no rights or say so in regards to property operations, and more importantly no control over when the property will be sold.

Securities Investigation: Everest Kensington DST

The White Law Group is investigating the liability that FINRA registered brokerage firms may have for improperly recommending high-risk investments to investors.

Despite the risks of investing in DSTs, brokerage firms continue to push this type of investment because of the high commissions associated with their sale and creation.

Fortunately, FINRA does provide for an arbitration forum for investors to resolve disputes if a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment. It is possible that they could be found liable for investment losses in a FINRA arbitration claim.

Class Action vs. Individual FINRA Arbitration Lawsuit

When deciding between a class action lawsuit and an individual FINRA arbitration, investors may have the option to pursue claims directly against the sales agents and brokerage firms responsible for selling the investments. These claims are separate from a class action lawsuit.

You might wonder whether a large class action lawsuit is a better litigation strategy than an individual FINRA arbitration case. The answer depends on various factors, but generally, if the financial loss is significant (for example, over $100,000), an individual arbitration claim may be the preferable route. On the other hand, class actions are typically more suitable for situations where a large number of individuals have smaller claims that would be impractical to pursue individually.

Call for your Free Consultation

If you are concerned about your investment in Everest Kensington DST, please call the securities attorneys at The White Law Group at 888-637-5510 for a free consultation. 

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington.