A Sooke, B.C., carpenter who turned $88,000 into $415 million investing in Tesla stocks, only to lose it all in short order, has filed a lawsuit against the Royal Bank of Canada and an accounting firm.
Christopher DeVocht claims that RBC Dominion Securities Inc., RBC Wealth Management Financial Services Inc., and Grant Thornton LLP breached contracts, were negligent in their duties and gave “inadequate advice” that led to him going completely bust.
According to the claim filed in B.C. Supreme Court, DeVocht was a small, part-time investor with a portfolio of mainly Tesla Inc. stocks and derivatives that was worth $88,000 at 2019 year-end.
“As the value of Tesla stock grew rapidly during that period, Mr. DeVocht continued investing all of his money and the investment gains in put and call options for Tesla stock,” says the claim.
“By the end of February 2020, the indicated value of his securities portfolio was approximately $5.5 million CAD. By the end of June 2020, when he was 30 years old, the indicated value … was approximately $26 million CAD, and rising rapidly.”
The claim goes on to say that DeVocht wanted to move out of his rental apartment and buy a residence. He contacted a representative at RBC Private Banking about obtaining a loan against the equity in his RBC trading account and was introduced to an RBC financial management adviser. He then entered an agreement with RBC for financial planning advice.
At this point, his portfolio was valued at almost $50 million.
The claim says RBC advisers failed to understand and support DeVocht’s evolving wishes to “essentially retire” by liquidating his Tesla options and moving the wealth into secure investments that would generate passive income.
According to the claim, DeVocht was provided with an RBC margin account which allowed him to easily borrow money to make trades. He was also introduced to a tax adviser at Grant Thornton LLP.
By April 2021, DeVocht’s net worth had grown to $186 million, according to the claim. By November of the same year, his securities portfolios were worth $415 million.
The claim says DeVocht was twice advised to donate to the RBC Charitable Gift Fund in order to obtain charitable tax credits, giving approximately $8.5 million in December 2020 and then another $17 million one year later.
By October 2022, Tesla shares were in sharp decline, and DeVocht’s investment holding company was forced to sell shares to repay loans from his RBC margin account.
“In time, the plaintiffs’ security holdings were worth nothing,” states the claim.
“But for the defendants’ inadequate advice … the plaintiffs would have preserved a substantial portion of their wealth and implemented financial planning that would not have resulted in the loss of their entire net worth.”
None of the defendants have filed a response.