A Tesla trader turned $65,000 into $306 million before losing it all, according to a lawsuit

• A Canadian trader turned $65,000 into $306 million by betting on Tesla during the pandemic.

• However, a lawsuit shows the trader lost it all in the 2022 bear market.

• The trader is suing RBC and Grant Thornton, claiming he received “inadequate advice” that led to huge losses.

A trader from Vancouver Island, Canada, minted a fortune betting on Tesla stock before losing everything, according to a lawsuit filed against RBC and tax advisory firm Grant Thornton LLP last week.

Christopher DeVocht, a carpenter by day, successfully traded Tesla stock and options during the COVID-19 pandemic, when a record amount of stimulus helped stocks soar and drove a retail-trading boom.

At the end of 2019, DeVocht had C$88,000, or about $65,000, with the Royal Bank of Canada’s brokerage division. At its peak in November 2021, according to the lawsuit, DeVocht’s account grew to C$415 million, or about $306 million.

But DeVocht and his professional advisors didn’t cash out and instead lost everything as a brutal bear market took hold in 2022, leading to staggering losses for his heavily concentrated portfolio.

According to the lawsuit, DeVocht claims the advice he received from RBC and Grant Thornton LLP was negligent and “inadequate,” contributing to his account’s staggering decline.

“RBC considered Mr. DeVocht to be a sophisticated investor,” the complaint said. “While this was true in respect of his strategies for put and call options in the trading of Tesla shares, RBC failed to appreciate that Mr. DeVocht’s knowledge of investing more generally, of financial planning, and of tax was in fact limited.”

According to the lawsuit, DeVocht was advised by his team of advisors at RBC and Grant Thornton LLP to incorporate a company and roll his securities into it in a bid to lower his tax liabilities from the massive gains he had on paper.

He also allegedly received advice to give C$25.5 million in charitable donations to lower his tax liability, which also ended up erasing a big chunk of his wealth, according to the lawsuit.

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RBC also set up margin loan accounts for DeVocht to borrow against the concentrated Tesla stock position for spending purposes, like moving out of his apartment rental to buy a home, the lawsuit said.

But when Tesla stock plunged in 2022, DeVocht was forced to sell Tesla stock at depressed prices to pay back those margin loans.

The lawsuit said, “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 lawsuit also said that advisors at RBC failed to understand DeVocht’s evolving wishes to “essentially retire” by reducing his exposure to his concentrated Tesla bet.

DeVocht’s lawsuit filing is an initial notice of claim and didn’t include evidence like brokerage account statements to prove his gains or losses.

RBC and Grant Thornton LLP told media outlets that they do not comment on active lawsuits before the courts.

Read the original article on Business Insider