Sam Bhushan Involved in Multiple Investor Lawsuits over Failed Deals
Sam Bhushan has been named in a recently filed FINRA arbitration involving the sale of real estate–related investment products. According to publicly available regulatory information as of February 1, 2026, the matter arises from a customer complaint reported to the Financial Industry Regulatory Authority (FINRA) by his broker-dealer. If you lost money in a Regulation D private placement or illiquid real estate investment, contact MDF Law today. We represent investors nationwide in FINRA arbitration and securities disputes. Call 800-767-8040 for a confidential case evaluation.
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Delaware Statutory Trust Investments Explained
Delaware Statutory Trust (DST) offerings are commonly used as replacement property in Section 1031 exchanges. A DST is a trust structure that allows multiple investors to purchase fractional beneficial interests in commercial real estate assets. These properties may include multifamily housing, medical facilities, self-storage projects, or other institutional-grade commercial holdings. Investors do not hold title directly; instead, they own beneficial interests in the trust that holds the real estate.
Although DST programs are tied to real estate transactions, they are legally classified as securities. That classification is significant. Because DST interests are securities, they must be sold by properly licensed securities professionals and are subject to federal and state securities laws as well as FINRA oversight. When investors incur losses, regulatory questions frequently focus on whether appropriate due diligence, suitability analysis, and risk disclosure were performed.
DST investments are often marketed as passive vehicles that provide potential income and tax deferral benefits under Section 1031 of the Internal Revenue Code. These features can be especially attractive to retirees or individuals seeking to simplify their holdings after selling appreciated real estate. However, DSTs also carry structural risks. Investors typically relinquish control over management decisions, and there is generally no liquid secondary market. Many offerings rely on leverage and refinancing assumptions, which can create vulnerability in rising interest rate environments or weakening commercial real estate markets. Projected returns are dependent on occupancy levels, tenant stability, and sponsor performance.
Most DST offerings are structured as Regulation D private placements. Because these securities are exempt from full SEC registration, they do not provide the same level of public disclosure as registered securities. That regulatory structure places heightened responsibility on brokers who recommend them. Where risk disclosures are insufficient or suitability determinations are flawed, particularly in the case of elderly investors, serious legal concerns may arise.
Allegations Involving a Regulation D Private Placement
The pending arbitration lawsuit reportedly centers on allegations that Sam Bhushan failed to satisfy professional obligations when recommending a real estate–based Regulation D private placement. Claims of this type are commonly resolved through FINRA arbitration when investors experience losses in illiquid or alternative investments.
Regulation D permits issuers to raise capital without full Securities Act registration. These offerings are frequently used for real estate development projects, 1031 exchange replacement structures, and other private ventures. Because they involve reduced transparency compared to publicly traded securities, they often present elevated risk. That dynamic increases the importance of broker diligence and investor protection safeguards.
FINRA guidance requires brokers to conduct a reasonable investigation before recommending any private placement. This includes reviewing the sponsor’s background and financial condition, analyzing projected performance assumptions, understanding capital structure and debt exposure, identifying conflicts of interest, and independently assessing the risk profile of the offering. Brokers such as Sam Bhushan are not permitted to rely solely on issuer-provided marketing materials.
Suitability obligations are equally important. Under FINRA Rule 2111, an investment recommendation must align with the investor’s financial situation, objectives, liquidity needs, risk tolerance, and investment experience. Real estate private placements are often speculative and illiquid. They may involve leverage, refinancing exposure, and extended holding periods without a secondary market. Recommending such an investment to an investor whose profile does not support those risks may give rise to a claim for unsuitable investment advice.
Disputes in this area frequently involve allegations of misrepresentation or omission of material facts. Investors may contend that they were not fully informed of risks such as capital impairment, lack of liquidity, sponsor compensation structures, refinancing exposure, or market sensitivity. The mere delivery of disclosure documents does not automatically satisfy a broker’s obligations if those risks were not clearly and meaningfully explained.
Supervisory oversight is another critical component. Brokerage firms are required to implement and maintain reasonable supervisory systems to monitor recommendations made by their representatives. Where red flags, excessive concentration, or product-level risks are not detected, supervisory liability may follow.
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Investor Rights in FINRA Arbitration
Most brokerage account agreements require disputes to be resolved in FINRA arbitration rather than in court. Investors who believe they sustained losses due to unsuitable recommendations or inadequate due diligence may pursue claims that include unsuitable investment advice, negligent misrepresentation, breach of contract, securities law violations, or failure to supervise.
Each arbitration is fact-specific. Evaluating potential liability typically involves reviewing offering documents, communications, account statements, investor profiles, and supervisory procedures. Central issues often include whether a reasonable investigation was conducted, whether the recommendation matched the investor’s objectives, and whether material risks were fully disclosed.
Regulation D exemptions were designed to facilitate capital formation, but they do not eliminate broker accountability. Because private placements operate with reduced transparency, regulators have emphasized the need for heightened scrutiny. When those standards are not met, investors may have legal recourse.
For Investors Who Sustained Losses
Individuals who invested in real estate–based Regulation D private placements recommended by Sam Bhushan and experienced losses may wish to consult counsel familiar with FINRA arbitration and complex alternative investment disputes. Private placements are sophisticated securities products, and brokers have defined obligations regarding investigation, suitability, and disclosure. When those obligations are not satisfied, investors may be entitled to pursue recovery through arbitration.
Contact MDF Law if you lost Money with Sam Bhushan
MDF Law focuses exclusively on representing investors in FINRA arbitration, Regulation D disputes, and private placement losses nationwide. If you believe you were sold an unsuitable investment, call 800-767-8040 today.