Written by The White Law Group• February 4, 2021• 7:42 pm• Blog, Current Investigations

LSC-Regency Crest DST, Securities Investigation

Are you concerned about your investment in LSC-Regency Crest 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.

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Delaware Statutory Trusts, or DSTs, are an alternative for 1031 exchange investors seeking replacement properties, allegedly offering the potential for monthly income and diversification without any on-going landlord duties.

Livingston Street Capital, reportedly offers 1031 exchanges structured through DSTs. The company filed a form D to raise capital from investors for the offering LSC-Regency Crest DST. The total offering amount was purportedly $23,440,000.

Risk Factors related to a 1031 Exchange

Property Value Loss – All real estate investments have the potential to lose value over time.

Tax Status Changes – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities.

Possibility of Foreclosure – All financed real estate investments have potential for foreclosure.

Illiquid Investments – 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments.

Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions.

Fees/Expenses – Investors’ returns may be affected by the costs associated with the transaction. and may outweigh the tax benefits.

Investigating Potential Lawsuits

The White Law Group is investigating potential securities claims involving broker dealers who may have improperly recommended 1031 exchange investments to clients.

Despite?the risks of investing in DSTs, The White Law Group has seen a number of instances where 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.