UBS Financial Advisor David W. Demarest Faces $15 Million FINRA Arbitration Over Treasury and Options Overlay Strategy

Investors who worked with UBS Financial Services financial advisor David Walter Demarest (CRD# 4843128) in Lexington, Kentucky, should be aware of a newly disclosed customer dispute now pending against him. According to his FINRA BrokerCheck report, a customer has filed a FINRA arbitration claim alleging that Demarest and UBS recommended an unsuitable, high-risk investment strategy involving long-term U.S. Treasury securities combined with an options overlay.

Background on the Broker

Demarest has been registered in the securities industry since 2004. His employment history includes:

• UBS Financial Services Inc. — Financial Advisor, July 2013 to present (Lexington, KY branch)
• J.P. Morgan Securities LLC/Inc. — 2008 to 2012
• Merrill Lynch, Pierce, Fenner & Smith Incorporated — 2004 to 2008

He holds his Series 7 (General Securities Representative), Series 66 (Uniform Combined State Law), and SIE examinations, and is currently registered as both a broker and an investment adviser representative in 24 U.S. states and territories.

Demarest also reports outside business activities tied to real estate: he is a sole proprietor of FFE, Inc., which provides consulting and billing services to Green Partners, LLC, a commercial real estate partnership in which he is also a partner.

The Pending Customer Dispute

The disclosure, filed with FINRA Arbitration on August 3, 2026 (Docket/Case #26-01732), covers a claimed time frame from 2020 to 2026 while Demarest was employed at UBS Financial Services Inc. The claimant alleges that UBS recommended an overly risky long-term U.S. Treasuries and options overlay strategy, resulting in alleged damages of $15,000,000.

Key details reported on BrokerCheck:

What This Strategy Involves — and Why It Can Go Wrong

An “options overlay” strategy layered on top of long-term Treasury bonds is a sophisticated approach typically used to generate additional income or hedge interest rate risk. However, these strategies can carry substantial risk that may not be appropriate for all investors, particularly:

• Interest rate sensitivity: Long-duration Treasury holdings can suffer significant mark-to-market losses when rates rise.
• Options complexity: Overlay strategies involving options (covered calls, collars, or similar structures) can cap upside, create unexpected losses, or introduce leverage-like risk depending on structure.
• Suitability concerns: Brokers are obligated under FINRA rules to ensure that recommended strategies match a client’s risk tolerance, time horizon, and investment objectives. A retiree or conservative investor placed into a complex overlay strategy without adequate risk disclosure may have grounds for a suitability claim.

At this stage, it’s important to note that this is only an allegation — the matter is pending and has not been resolved, adjudicated, or settled. UBS and Demarest have not been found to have done anything wrong, and the claim may ultimately be withdrawn, dismissed, or resolved in the broker’s favor.

Why BrokerCheck Matters

This case is a reminder of why investors should periodically check their financial advisor’s background using FINRA BrokerCheck. BrokerCheck reports disclose customer complaints, arbitration claims, regulatory actions, and other red flags that may not otherwise be visible to the public. Investors who worked with Demarest during the 2020–2026 period involving similar Treasury and options-based strategies may want to review their account statements and consider whether the investments recommended to them were suitable given their financial goals and risk tolerance.

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This post is based on information published in David W. Demarest’s FINRA BrokerCheck report (CRD# 4843128). Disclosure information is self-reported or regulator-reported to FINRA’s Central Registration Depository and may include pending, unresolved, or contested allegations.