The bank named in a lawsuit brought by a Vancouver Island carpenter who made — and then lost — $415 million buying and selling Tesla stock has denied any wrongdoing in documents filed in B.C. Supreme Court.
Christopher DeVocht of Sooke, B.C., filed the civil claim last year alleging that RBC Dominion Securities Inc. and RBC Wealth Management Financial gave “inadequate advice” that prevented him from preserving any of the massive wealth he accumulated in his trading accounts.
But in a response filed in B.C. Supreme Court, RBC says it did caution DeVocht to adopt a more broad and conservative approach to his portfolio.
“The plaintiffs had numerous opportunities throughout the relevant period to follow RBC DS’s investment advice by diversifying and derisking the mix of assets in their investment accounts, and if they had done so their accounts would still be worth tens of millions of dollars, if not more,” reads RBC’s response.
RBC describes DeVocht as being committed to “his own all or nothing leveraged options trading strategy.”
DeVocht claims in his lawsuit that he was a small, part-time investor with a portfolio of mainly Tesla Inc. stocks and derivatives worth $88,000 at 2019 year-end. By June of 2020, his portfolio was worth $26 million “…and rising rapidly.”
In August 2020, DeVocht contacted RBC Private Banking about obtaining a loan against the equity in his self-directed RBC trading account — then valued at $50 million — so he could move out of his rental apartment and buy a place.
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That’s when he was introduced to an RBC financial manager and signed an agreement with RBC for financial planning advice.
According to the lawsuit, he was provided with an RBC margin account which allowed him to easily borrow money to make trades.
He was also referred to tax specialist Grant Thornton LLP in order to reduce his tax exposure. Grant Thornton LLP is also named as a defendant in the lawsuit, and like RBC, has denied all allegations made by DeVocht.
DeVocht claims that RBC mistakenly treated him like a sophisticated investor when he was anything but.
But the bank says when DeVocht became a client “he was already a highly sophisticated and experienced options trader, including with the use of significant margin.”
When DeVocht transferred the assets of his self—directed trading account to RBC DS in Sept. 2020, the market value was $77.27 million US.
In November of 2021, DeVocht’s portfolio topped out at $415 million. But then Tesla stocks tanked, wiping out DeVocht at the same time.
RBC says it would have been “abundantly clear” to DeVocht that his leveraged options trading strategy brought “significant volatility and risk.”
“Ultimately, it was DeVocht’s own fully—informed decisions that led to the losses in the plaintiffs’ investment accounts…” says the RBC response.
None of the allegations in the lawsuit or response have been tested in court.
