Madison Farms DST: Securities Investigation

Investigating Potential Claims involving Madison Farms DST

The White Law Group is investigating potential securities claims involving broker dealers who may have improperly recommended Madison Farms DST to investors.

According to SEC filings, Madison Farms DST based in Nashua, New Hampshire, filed a Form D on September 28, 2022, to raise capital from investors. The total offering amount was purportedly $80,297,330, according to the Reg D filing.

Complex Investment Products

1031 Delaware Statutory Trusts, or DSTs, are complex investments due in comparison to other types of investments. A Delaware Statutory Trust was formed under Delaware law and is commonly used in commercial real estate transactions. Its purpose is to provide investors with limited liability and can be used to hold title to real property.

Although 1031 DSTs may be suitable for some investors, they are not the best alternative for everyone due to their financial drawbacks. One example is that 1031 DSTs cannot raise additional capital after the initial investment, which means that investors may be responsible for unexpected expenses, such as repairs, or a decrease in occupancy or rental income. The investors also have limited authority over the property.

While the sponsor may welcome feedback from the investors in the DST, they don’t typically allow any actions to be taken by any one investor. Illiquidity is also a primary concern when investing in a DST. This makes it difficult to find a buyer if an investor wants to sell their interest prior to the sale of the property.

Madison Farms DST: Is it Suitable for You?

A financial advisor should analyze the suitability of investments before recommending them to their clients. There are several factors that should be considered to ensure an investment would be suitable for their clients. Some of those details include liquidity needs, time horizon, risk tolerance, age, and income.

The brokerage firm must ensure that due diligence was completed at every level of each investment. Consider all aspects of the investment and diligently review your options prior to investing in a 1031 DST investment.

Free Consultation with Securities Attorneys

The White Law Group is investigating the liability that FINRA registered brokerage firms may have for improperly recommending high-risk 1031 DST investments to investors. Brokerage firms continue to push this type of investment despite the risks of investing in DSTs, because of the high commissions associated with their sale and creation.

Note that FINRA provides 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. They could be found liable for investment losses in a FINRA arbitration claim.

If you are concerned about your investment in Madison Farms DST, please contact 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.