Hayworth Tanglewood DST Lawsuit: Recovery of Investment Losses
The White Law Group is investigating potential claims involving Hayworth Tanglewood DST including whether brokerage firms conducted adequate due diligence before recommending this 1031 Delaware Statutory Trust (DST) investment to investors. If you have suffered investment losses in Hayworth Tanglewood DST, you may be able to file a FINRA arbitration claim for recovery.
Hayworth Tanglewood DST Lawsuit
In Hayworth Tanglewood IB, LLC v. Hayworth Tanglewood DST, et al., pending in the Delaware Court of Chancery, the plaintiff alleges that the defendants failed to properly redeem ownership interests after more than $37 million in beneficial interests were sold to outside investors.
On January 15, 2026, the Delaware Court of Chancery allowed several of the plaintiff’s claims to proceed.
What Does the Hayworth Tanglewood DST Lawsuit Mean for Investors?
Hayworth Tanglewood DST was structured as a private placement real estate investment and was sponsored by Versity/Crew. The offering was intended to provide investors with an interest in a multifamily property while potentially allowing qualifying investors to participate in a 1031 exchange.
According to its SEC Form D filing, the offering sought to raise approximately $76.8 million.
DST investments are often marketed as a way to obtain:
- Potential 1031 exchange tax deferral
- Passive real estate ownership
- Potential income from commercial or multifamily properties
However, DST investments also carry significant risks. Investors generally have limited control over the underlying property and depend on the sponsor, trustee, and property manager to operate the investment according to the offering documents.
Developments involving The Hayworth property and the pending litigation may create additional uncertainty for investors, particularly concerning liquidity, property value, financing, and the ultimate recovery of invested capital.
Risks of Hayworth Tanglewood DST
Like other private placement DST investments, Hayworth Tanglewood DST involves substantial risks, including:
- Illiquidity: DST interests generally cannot be easily resold.
- Real estate risk: Property values, occupancy, rents, and operating expenses can affect investor returns.
- Financing risk: Underlying property debt can increase the risk of losses.
- Sponsor and trustee risk: Investors rely on the parties managing and administering the investment.
- Limited investor control: Investors generally cannot make management decisions concerning the property.
- Potential loss of principal: Private placement investments can result in significant or total losses.
- Litigation and other legal risks: Disputes involving the DST or underlying property may affect investors.
Did Your Broker Properly Recommend Hayworth Tanglewood DST?
The White Law Group is also investigating whether brokerage firms and financial advisors properly evaluated Hayworth Tanglewood DST before recommending it to customers.
FINRA rules and Regulation Best Interest impose obligations on broker-dealers concerning recommendations of securities. Depending on the circumstances, a brokerage firm may have obligations relating to the suitability or appropriateness of an investment, reasonable diligence, disclosure of material risks, and conflicts of interest.
A DST may be unsuitable for an investor who needs liquidity, cannot tolerate significant real estate or private-placement risk, or was not adequately informed about the risks associated with the investment.
Can Investors Recover Hayworth Tanglewood DST Losses?
Investors who suffered losses in Hayworth Tanglewood DST may have potential claims against the brokerage firm or financial advisor that recommended the investment.
Depending on the circumstances, potential claims may involve:
- Unsuitable investment recommendations
- Failure to conduct adequate due diligence
- Misrepresentations or omissions
- Failure to disclose material risks
- Breach of fiduciary duty
- Negligent supervision
Many claims against FINRA-member brokerage firms are resolved through FINRA arbitration, which allows investors to pursue individual claims for damages.
The viability of a claim depends on the individual investor’s circumstances, including when and why the investment was recommended, the investor’s financial objectives and risk tolerance, the information provided by the broker, and the losses sustained.
Frequently Asked Questions About Hayworth Tanglewood DST
What is the Hayworth Tanglewood DST lawsuit about?
The Delaware lawsuit involves allegations concerning the handling of ownership interests and proceeds associated with Hayworth Tanglewood DST. The plaintiff alleges breaches of contract and fiduciary duties, among other claims.
Can I recover losses from Hayworth Tanglewood DST?
Potentially. An investor may have a claim against the brokerage firm or financial advisor that recommended the investment, particularly if the investment was unsuitable or material risks were not adequately disclosed. Each claim must be evaluated individually.
What if I still own my Hayworth Tanglewood DST investment?
You may still have potential claims depending on the circumstances surrounding the original recommendation and your current investment position. A loss does not necessarily have to be realized before an attorney can evaluate whether misconduct occurred.
Contact The White Law Group
If you invested in Hayworth Tanglewood DST and are concerned about your investment, contact The White Law Group for a free consultation.
Call 888-637-5510.
Our securities attorneys represent investors nationwide in claims involving private placements, 1031 DST investments, real estate securities, and other complex investments. We can review your investment and help determine whether you may have a claim for recovery through FINRA arbitration or other legal remedies.
About The White Law Group
The White Law Group is a national securities law firm representing investors in claims against brokerage firms involving private placements, 1031 DST investments, unsuitable investments, and other complex securities products. The firm has offices in Chicago, Illinois, and Seattle, Washington, and represents investors nationwide.
