RBC says Vancouver Island Tesla investor was warned of risks before $415M loss

Royal Bank of Canada is rejecting allegations that it provided improper financial advice to a British Columbia Tesla investor who famously turned a modest five-figure investment into hundreds of millions of dollars—before losing it all. In court filings submitted to the B.C. Supreme Court, RBC has denied responsibility for the losses suffered by Christopher DeVocht, a Vancouver Island carpenter from Sooke, B.C., who amassed a staggering $415 million trading Tesla stock and options at the peak of the market. DeVocht filed a civil lawsuit last year accusing RBC Dominion Securities Inc. and RBC Wealth Management Financial of failing to properly guide him toward preserving his wealth. According to RBC’s response, the bank says it repeatedly advised DeVocht to diversify his holdings and reduce risk, advice that it claims went unheeded. “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 the filing. (via CBC) RBC characterizes DeVocht as a highly experienced trader who was committed to an aggressive, leveraged options strategy centered almost entirely on Tesla stock. The bank argues that when DeVocht became a client, he was already using complex financial instruments and significant margin, making the risks of his approach clear. DeVocht’s rise was meteoric. At the end of 2019, his Tesla-heavy portfolio was reportedly worth just $88,000. By June 2020, it had surged to $26 million as Tesla shares skyrocketed. Later that summer, with his account valued around $50 million, DeVocht contacted RBC Private Banking to explore borrowing against his portfolio to purchase a home. That interaction led to a formal financial planning agreement and the opening of a margin account that allowed him to borrow funds for trading. By November 2021, DeVocht’s portfolio reached its peak at $415 million. However, as Tesla’s share price declined, margin calls forced large-scale liquidations. The resulting cascade of sales ultimately wiped out his entire position. RBC maintains that the outcome was the result of DeVocht’s own informed decisions. “Ultimately, it was DeVocht’s own fully-informed decisions that led to the losses in the plaintiffs’ investment accounts,” the bank stated in its response. The lawsuit also names accounting firm Grant Thornton LLP, which provided tax advice to DeVocht during his rise. Grant Thornton has likewise denied all allegations. None of the claims made by either side have been tested in court, and the case remains ongoing.