Post by
Oregonduck on Oct 04, 2024 4:30pm
Don’t be a Schmuck and be author of your own misfortune!!
Could have, Would have, Should have sold. Blame no one.
Thursday October 3 2024 - Street Wire
by Mike Caswell
RBC Dominion Securities Inc. is facing a lawsuit in the Supreme Court of British Columbia from Christopher DeVocht, a Vancouver Island man who lost his entire $415-million portfolio. Mr. DeVocht claims that RBC provided him with inadequate advice as he carried out risky trades and his account suffered sharp declines. Among other things, the firm set him up with a margin account and substantial loans that amplified his risks, he says.
The allegations are contained in a notice of claim that Mr. DeVocht filed at the Vancouver courthouse on Tuesday, Oct. 1. The notice identifies Mr. DeVocht as a resident of Sooke, B.C., who had worked as a carpenter until he started suffering from health problems in 2019. Mr. DeVocht says that he began investing in his early 20s, trading derivatives, largely in Tesla Inc.
The case arises in part from the value of Mr. DeVocht's portfolio which, as set out in the lawsuit, grew enormously. At the end of 2019, he had an $88,000 portfolio, which had grown to $26-million by mid-2020, when he was 30 years old, the suit states. The substantial gains arose almost entirely from trades in shares and options in Tesla (which more than doubled during that period, reaching an $1,119 (U.S.) high).
With his account value rapidly rising, RBC assigned advisers to Mr. DeVocht who should have helped him preserve his wealth, according to the suit. Among other things, RBC set him up with a tax adviser at Grant Thortnton LLP and an RBC employee who was a "coach and coordinator of financial planning and investment management," the suit states. According to the suit, the advisers were to make proper inquiries and advise Mr. DeVocht on the risks and consequences of his financial planning. The firm was also to advise and recommend strategies that would minimize risks, Mr. DeVocht says.
Meanwhile, the value of Mr. DeVocht's portfolio continued to increase in value, reaching $415-million by Nov. 30, 2021, according to the suit. The portfolio was largely concentrated in Tesla, and RBC gave him no advice to the contrary, Mr. DeVocht claims. He says that despite his "extraordinary wealth," RBC's planning advice encouraged and rewarded such concentration and was not updated or amended. Mr. DeVocht says that around this time, he made a $17-million donation to an RBC Charitable Gift Fund, a payment that earned him a congratulations from his adviser.
Problems soon arose, according to the suit. In 2022, Tesla suffered a series of declines. Mr. DeVocht says that he was forced to sell Tesla shares to repay loans from his margin account. He attempted to mitigate his losses, but was constrained by the tax planning that RBC and Grant Thornton had done, the suit states. Ultimately, Mr. DeVocht's account was worth nothing, according to the suit.
As Mr. DeVocht sees things, his losses were caused in part by RBC and Grant Thornton. "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," the suit reads.
Mr. DeVocht is seeking court-ordered damages, plus legal costs and interest. Vancouver lawyer Sean Hern filed the lawsuit on behalf of Mr. DeVocht and a numbered company that he controls. In addition to RBC Dominion Securities, the suit names as defendants RBC Wealth Management Financial Services Inc. and Grant Thornton. The defendants have not yet filed a response.