Altamirano PLLC Files $765,000 FINRA Arbitration Against Cabin Securities Over Delaware Statutory Trust Investments

Altamirano PLLC has filed a FINRA arbitration claim against Cabin Securities, Inc. over its recommendations to invest in Delaware Statutory Trust (“DST”) offerings, including the Inspired Senior Living of Eugene DST sponsored by Inspired Healthcare Capital (“IHC”) and another DST investment. The arbitration was filed on behalf of a Glendale, California investor and was submitted under FINRA’s Accelerated Processing Rules.

What Is a Delaware Statutory Trust (DST)?

A Delaware Statutory Trust (“DST”) is a legal structure allowing multiple investors to acquire fractional interests in real estate. DSTs are frequently marketed to investors as part of Section 1031 exchanges that offer passive real estate ownership, stable cash flow, capital preservation, and potential tax deferral. Conservative investors and retirees seeking safe income often rely on these distributions as an important source of income.

Unlike publicly traded REITs, Delaware Statutory Trust interests are typically sold through private placement offerings and generally cannot be easily sold on a public market. DST interests are securities typically offered pursuant to Regulation D private placement exemptions, which means they are not registered with the Securities and Exchange Commission (SEC).

Delaware Statutory Trusts are complex investments that are not suitable or appropriate for every investor. First, the value of the investment depends on several factors, including the financial condition of the sponsor, the performance of the underlying real estate asset, financing arrangements, fees, expenses, and the ongoing operation of the property.

Second, Delaware Statutory Trusts are highly illiquid. Investors generally cannot sell their interests, redeem their investment, or access their principal prior to a liquidity event controlled by the sponsor. DSTs often have long “lock-up” periods during which an investor’s capital remains invested until the underlying property is sold. It is not uncommon for funds to be illiquid for approximately 7 years, or longer. Investors cannot withdraw their principal whenever they choose.

Third, returns depend heavily on the sponsor’s financial condition, management decisions, use of leverage, and the operating performance of the underlying property.

Why Delaware Statutory Trusts Are Used in 1031 Exchanges

Delaware Statutory Trusts are commonly recommended to real estate investors completing Section 1031 exchanges because they allow investors to defer capital gains taxes while acquiring a fractional interest in institutional real estate.

Under this structure, a sponsor acquires commercial real estate properties, including senior living facilities, multifamily, student housing, and pools investor capital into the trust. Investors receive proportional shares in income and any potential appreciation upon exit of the underlying real estate assets.

Delaware Statutory Trust offerings are frequently distributed through a network of broker-dealers. A sponsor typically retains a managing broker-dealer to oversee the offering, while individual brokerage firms enter into selling or soliciting dealer arrangements to recommend the investments to their own customers. Although the sponsor creates the offering, the recommending brokerage firm remains responsible for complying with its obligations under the federal securities laws and FINRA rules when recommending a DST investment to a customer.

Broker-Dealer Responsibilities When Recommending DST Investments

The arbitration filed by Altamirano PLLC involves the Inspired Senior Living of Eugene DST (the “IHC Eugene DST”), which was a private placement offering sponsored by Inspired Healthcare Capital, whose affiliated entities filed for Chapter 11 bankruptcy protection in February 2026.

The IHC Eugene DST had a targeted offering size of approximately $43.3 million and a minimum investment of $50,000. According to the Statement of Claim, the claimant sought investments focused on capital preservation and stable income following the sale of investment real estate.

When recommended to investors seeking safe income and capital preservation, Delaware Statutory Trusts can present significant risks if broker-dealers fail to adequately understand the investment or explain the risks. The arbitration alleges that the recommendations exposed the investor to risks associated with complex private placement investments, including illiquidity, leverage, sponsor dependence, operational risks, and affiliated-party arrangements.

Brokerage firms recommending a Delaware Statutory Trust investment have independent obligations under FINRA rules and the federal securities laws when making investment recommendations to retail customers. Those obligations include conducting reasonable due diligence, understanding the investment being recommended, and recommending only investments that are consistent with the customer’s investment profile, including the investor’s objectives, financial circumstances, and risk tolerance.

Firms are also required to adequately disclose the material risks associated with the recommended investments and ensure they comply with Regulation Best Interest and applicable FINRA suitability obligations.

Other Delaware Statutory Trust and Private Placement Claims We Handle

Altamirano PLLC represents investors nationwide in FINRA arbitration claims involving:

• Delaware Statutory Trusts (DSTs)
• Section 1031 Exchange Investments
• Non-Traded REITs
• Private Placements
• Alternative Investments
• Regulation Best Interest Claims
• Unsuitable Investment Recommendations
• Due Diligence Claims

Altamirano PLLC also represents investors in claims involving other private placements, non-traded REITs, interval funds, real estate funds, private credit funds, and other complex investment products. Some of the investment products our clients have invested in include:

• DealPoint Merrill – DPM Belle Oaks Marketplace Fund 1 LLC – investor distributions have been suspended
• InCommercial Net Lease DST 6 – investor distributions have been suspended
• GWG L Bonds – issuer GWG Holdings, Inc. filed for Chapter 11 bankruptcy protection
• Red Oak Capital Fund III LLC
• T. Rowe OHA OCredit
• Blackstone BREIT
• Easterly ROCMuni High Income Fund f/k/a Principal Street High Income Municipal Bond Fund – the fund collapsed and is being liquidated
• JLL Income Property Trust
• North Haven Private Income Fund – redemption requests have exceeded quarterly repurchase limits
• North Haven Net REIT
• Brookfield REIT
• Blue Owl Real Estate NLT
• Starwood REIT
• KKR Real Estate Select Trust
• MacKenzie Realty Capital Investment
• Versity DST Investments/Crew Enterprises
• Fortress Net Lease

If you have questions about a DST investment or believe you may have suffered investment losses because of unsuitable recommendations, contact Altamirano PLLC to discuss your situation.

Speak With a Delaware Statutory Trust Attorney at Altamirano PLLC

For more information regarding Delaware Statutory Trusts and FINRA arbitration claims, contact Altamirano PLLC at (212) 220-6556.

Jorge Altamirano is the Founder and Principal of Altamirano PLLC, where he represents investors nationwide in FINRA arbitration claims against brokerage firms and financial advisors. His practice focuses exclusively on investor-side securities arbitration representing harmed investors in complex investment disputes involving Delaware Statutory Trusts (DSTs), private placements, Regulation Best Interest, unsuitable investment recommendations, and failures to conduct reasonable due diligence.

What Clients Say

Investors considering FINRA arbitration often want to know what the process is like. Read reviews and testimonials from clients who have trusted Altamirano PLLC to represent them in investment disputes and FINRA arbitration matters. To discuss a potential Delaware Statutory Trust or other investment loss claim, contact Jorge Altamirano at [email protected] to schedule a free confidential case evaluation.

The consultation provides an opportunity to discuss how the Delaware Statutory Trust investment was recommended, whether it was appropriate in light of the investor’s objectives and circumstances, the role the financial advisor’s recommendation played in the client’s Section 1031 exchange strategy, and the obligations brokerage firms owe investors when recommending complex investment products.