A Canadian trader, Christopher DeVocht, turned a modest investment into a staggering $306 million by betting on Elon Musk‘s Tesla Inc. TSLA stock. However, he lost it all during the 2022 bear market and is now suing the Royal Bank of Canada (RBC) and Grant Thornton, alleging “inadequate advice.”
What Happened: DeVocht, a carpenter from Vancouver Island, Canada, capitalized on the pandemic-induced stock surge, turning his C$88,000 (approximately $65,000) investment with RBC into a C$415 million (about $306 million) fortune by November 2021, reported Business Insider.
However, DeVocht and his advisors chose to hold onto the stocks, resulting in significant losses during the 2022 bear market. DeVocht alleges that the advice he received from RBC and Grant Thornton was negligent and “inadequate,” contributing to his account’s staggering decline.
DeVocht’s advisors suggested incorporating a company and rolling his securities into it to reduce his tax liabilities from the massive gains he had on paper.
He was also advised to make charitable donations to lower his tax liability, which further eroded his wealth. RBC also set up margin loan accounts for DeVocht to borrow against his concentrated Tesla stock position for spending purposes.
DeVocht’s lawsuit filing is an initial notice of claim and did not include evidence like brokerage account statements to prove his gains or losses.
Why It Matters: The Tesla stock has been a subject of significant market activity in recent times. In September, traders were looking at the next big catalyst for a bullish thesis, with three major events coming up in early October, including the Fed’s meeting and first rate cut.
Despite the stock’s plunge in October, Tesla’s third-quarter deliveries exceeded consensus and grew year-over-year. The company also dropped the rear-wheel drive (RWD) variants of the Model 3 and Model Y in Canada, following a similar move in the U.S.
Analysts believe that Tesla’s highly anticipated Robotaxi Day could be a significant catalyst for the stock, with several unannounced items potentially driving the stock even further.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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