With the stock market offering numerous opportunities to make profits, one investor capitalized on this potential, turning a modest $88,000 investment into a staggering $415 million.
However, in a dramatic financial collapse, the investor, identified as Christopher DeVocht from Vancouver Island, lost it all, according to a Stockwatch report.
The transaction was revealed in a lawsuit in which DeVocht is suing RBC Dominion Securities, alleging the investment firm provided inadequate advice, causing the losses.
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The lawsuit, filed in the Supreme Court of British Columbia, accuses RBC of setting DeVocht up with risky loans and margin accounts, which magnified his losses as his bets on shares of electric vehicle manufacturer Tesla (NASDAQ: TSLA) and derivatives began to unravel.
According to the lawsuit filed on October 1, DeVocht alleged that his initial investment skyrocketed to $26 million by mid-2021, fueled by Tesla’s rally. By the end of 2021, his investment had reached $415 million, thanks to his aggressive trading of TSLA shares, which hit a high of $1,119.
How the losses unraveled
Unfortunately, the wealth evaporated due to risky trades, margin calls, and leveraged positions.
DeVocht alleges that the investment entity encouraged him to use a margin account and take on loans, which forced him to sell his Tesla shares to repay the borrowed amount.
It’s worth noting that margin accounts enable investors to borrow funds to buy more securities than they could with cash alone, but they also heighten the risks when markets move against the investor.
“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 states.
DeVocht contends that the brokerage firm should have guided him toward more conservative strategies, given the volatile nature of his trades. RBC Dominion Securities has yet to file a response to the claim.
Notably, the lawsuit indicates that DeVocht was assigned a tax adviser from Grant Thornton LLP and an RBC employee who served as a coach for his financial management.
While such losses in the stock market are rare, they are more pronounced in the cryptocurrency market due to its inherent high volatility. For instance, as reported by Finbold, one investor saw their $1 million shrink to $9,000 within an hour for betting on a meme coin.
In summary, DeVocht’s losses are part of the stock market’s risks, which can be financially and emotionally devastating. However, with the right strategy, investors can recover by seeking support and maintaining discipline.
