Christopher DeVocht, a carpenter from British Columbia, Canada, found himself in a whirlwind of financial success and subsequent loss as a day trader. Starting with C$88,000 in late 2019, he managed to grow his investment to a staggering $306 million in just two years by trading Tesla Inc. stock options. However, despite his initial success in timing the market correctly, DeVocht ultimately had to sell all his holdings to repay loans from his brokerage margin account, resulting in massive losses.
DeVocht’s story took a legal turn when he filed a lawsuit against RBC Dominion Securities, RBC Wealth Management Financial Services, and Grant Thornton, alleging that they provided inadequate advice that led to the loss of his entire wealth. Despite being viewed as a “sophisticated” trader by RBC due to his options trading win rate, DeVocht claimed that his overall knowledge of investing, financial planning, and tax was limited. He had approached RBC for a loan in 2020 to buy a home, which eventually turned into an agreement for financial advisory services. However, his plans to essentially retire by offloading Tesla options were not understood or encouraged by the advisers, who recommended establishing a company and holding as much Tesla stock as possible.
DeVocht’s portfolio, which had more than doubled to over C$415 million within eight months, eventually collapsed due to extreme concentration in Tesla shares and the stock’s fluctuations and declines in 2022. Despite efforts to recoup losses by borrowing more money for short-term trades, DeVocht’s securities held within the company ended up being worth nothing. The substantial charitable donations suggested by RBC further depleted his wealth, leading him to seek compensation for breach of contract and negligence.
The case highlights the risks involved in high-stakes day trading and the importance of understanding one’s financial decisions and seeking appropriate advice. It serves as a cautionary tale for traders and investors alike, emphasizing the need for comprehensive financial planning and risk management strategies to avoid catastrophic losses.