Investigating Claims involving Starboard Dylan DST
The White Law Group is investigating potential securities claims involving broker-dealers who may have unsuitably recommended investments in Starboard Dylan DST to retail investors. If you suffered losses or your account was over concentrated in illiquid alternatives, you may be able to pursue recovery through FINRA arbitration.
About Starboard Dylan DST
According to a 2022 Form D notice filed with the U.S. Securities and Exchange Commission, Starboard Dylan DST is a Delaware Statutory Trust formed in 2021 and focused on residential real estate. Key details disclosed in the filing include:
- Exemption Claimed: Rule 506(b) of Regulation D; date of first sale: January 27, 2022.
- Minimum Investment: $25,000.
- Security Type: Beneficial interests in a Delaware Statutory Trust.
- Total Offering Amount: $35,350,000; total sold: $7,259,824; remaining: $28,090,176 (as of the filing date).
- Estimated Sales Compensation: 6.0% selling commissions; 0.50% due diligence allowance; 2.5% placement agent fee; 1.0% marketing allowance.
- Estimated Use of Proceeds to Sponsor/Related Persons: Sponsor acquisition fee of $1,460,500.
- Placement/Selling Groups Listed: Orchard Securities, LLC (CRD 133378); Aurora Securities (CRD 46147); McDermott Investment Services, LLC (CRD 154926); Emerson Equity LLC (CRD 130032); Concorde Investment Services, LLC (CRD 151604); several solicitations noted as “All States.”
Risks of Investing in Starboard Dylan DST
- Illiquidity: DST interests generally lack a secondary market; investors may be locked in until the property is sold.
- Lack of Control: Investors have no voting rights or operational authority over the trust or its assets.
- Concentration Risk: Single-asset or narrow portfolios increase exposure to local market conditions.
- Distribution Risk: Cash flows may be reduced or suspended due to vacancies, higher expenses, or financing pressures.
- Fee Drag & Conflicts: Upfront commissions, diligence/marketing allowances, and sponsor/placement fees reduce net proceeds and may create conflicts of interest.
- Tax/1031 Risks: Adverse tax treatment or timing issues can jeopardize Section 1031 deferral benefits.
Broker Duties & Potential Liability
FINRA-registered brokerage firms must conduct reasonable due diligence and ensure recommendations are suitable given an investor’s objectives, risk tolerance, and liquidity needs. If your advisor failed to fully disclose the risks, over concentrated your portfolio in illiquid alternatives, or recommended Starboard Dylan DST without proper diligence, the firm may be liable for resulting losses.
FINRA Arbitration vs. Class Action
For many investors with significant losses, individual FINRA arbitration may be more effective than participating in a class action. Arbitration can address your specific facts, including suitability, misrepresentation, and failure-to-supervise claims against the selling brokerage firm.
Free Consultation with a Securities Attorney
The White Law Group is a national securities fraud and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington, representing investors nationwide. If you are concerned about your investment in Starboard Dylan DST, please call The White Law Group at 888-637-5510 for a free consultation or visit our website.
FAQs: Starboard Dylan DST
Who could invest in Starboard Dylan DST?
The offering claimed a Rule 506(b) exemption, which generally limits participation to accredited investors (with limited exceptions). The minimum investment disclosed was $25,000.
What fees and commissions were disclosed?
The Form D reports estimated selling commissions of 6% of proceeds, a 0.50% due diligence allowance, a 2.5% placement agent fee, and a 1.0% marketing allowance, plus a sponsor acquisition fee estimated at $1,460,500.
How might I recover losses tied to Starboard Dylan DST?
Investors may seek recovery through FINRA arbitration against the brokerage firm if the investment was unsuitable, risks were misrepresented, or the firm failed to supervise the recommendation.
