Dean McDermott Faces Pending $227,000 FINRA Arbitration Over DST Investment

Sonn Law Group is reviewing a pending customer dispute involving Dean Patrick McDermott (CRD No. 1731834), a broker with McDermott Investment Services, LLC.

According to FINRA BrokerCheck, McDermott’s record contains one pending customer dispute, along with a regulatory disclosure and a civil disclosure. (FINRA)

Dean McDermott Customer Complaint

The pending FINRA arbitration was filed in March 2026 and concerns a Delaware Statutory Trust, or DST, purchased in August 2022 as part of a tax-advantaged Section 1031 exchange.

The claimants reportedly allege:

  • Unsuitable investment recommendations;
  • Inadequate due diligence;
  • Misrepresentations and omissions;
  • Negligence;
  • Breach of fiduciary duty;
  • Breach of contract; and
  • Failure to supervise.

The claimants are seeking $227,000 in damages. The case remains pending before FINRA Dispute Resolution. (SEC)

McDermott denies wrongdoing. His BrokerCheck statement maintains that he was not the claimants’ broker of record, that the claimants were experienced real estate investors, and that they received important disclosures concerning the DST investment.

The allegations are pending and have not been proven or adjudicated.

Risks Associated With DST Investments

Delaware Statutory Trust investments are sometimes marketed to real estate owners seeking to complete Section 1031 exchanges. However, DSTs can carry substantial risks, including:

  • Limited liquidity;
  • Lack of control over the underlying property;
  • Financing and interest-rate risk;
  • Sponsor-related risk;
  • Substantial commissions and fees;
  • Difficulty determining the investment’s current value; and
  • The potential loss of principal.

Financial professionals recommending DSTs must have a reasonable basis for their recommendations and consider whether the investment is appropriate for the customer’s financial circumstances, objectives, liquidity needs, and risk tolerance.

Did You Purchase a DST Through McDermott Investment Services?

Brokerage firms offering DSTs must evaluate the sponsor, financing, property portfolio, fees, projected distributions, conflicts of interest and risks affecting the investment.

An investor’s previous real estate experience does not necessarily mean every DST recommendation is suitable or that material risks can be omitted.

Investors who suffered DST losses after working with Dean McDermott, McDermott Investment Services or McDermott Investment Advisors can contact Sonn Law Group at 1-844-689-5754 for a confidential consultation.