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Robinhood Sued Over Suicide Of Young Trader Who Thought He Was $730,000 In Debt

by : Saman Javed on : 09 Feb 2021 11:06
Robinhood Sued Over Suicide Of Young Trader Who Thought He Was $730,000 In DebtPA Images/CBS News

The parents of an amateur investor who took his own life thinking he had amassed a six-figure debt on Robinhood are suing the trading app.

Last June, Alexander Kearns, 20, killed himself after he mistakenly believed he had lost $730,000 (£530,000) on the app.

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His parents are suing Robinhood for wrongful death, negligent infliction of emotional distress and unfair business practices.

In the filing, they allege Robinhood targets young and inexperienced customers, then pushes them to engage in risky trading practices. When those investors need help, the app provides ‘no meaningful customer support’, they said.

CBSThisMorning

On the day of his death, the young trader’s account had been restricted and showed a debt of $730,000. According to the lawsuit, Alex was sent an email demanding immediate action and a minimum payment of more than $170,000.

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He tried to contact their customer support for help but did not receive any.

In one of several emails to Robinhood, he wrote: ‘I was incorrectly assigned more money than I should have, my bought puts should have covered the puts I sold. Could someone please look into this?’

But he only received an automated reply saying the support team would get back to him ‘as soon as possible’.

In a note left to his parents on the day he died, Alex wrote: ‘I also have no clue what I was doing now in hindsight.’

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CBSThisMorning

In an interview with CBS This Morning, his father, Dan, said: ‘He thought he blew up his life. He thought he screwed up beyond repair.’

The day after his death, Robinhood emailed Alex back to say the restriction on his account had been rectified.

‘Great news! We’re reaching out to confirm that you’ve met your margin call and we’ve lifted your trade restrictions,’ the app said.

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Alex’s father believes his death could have been avoided had he received a prompt response. ‘It haunts me. It really does,’ he said.

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‘I lost the love of my life. I miss him more than anything. I can’t tell you how incredibly painful it is. It’s the kind of pain that I don’t think should be humanly possible for a parent to overcome,’ his mother Dorothy said.

Following Alex’s death, Robinhood said it had ‘revised experience requirements’ for customers who were seeking riskier trade options.

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However, Dan said the checks still aren’t strong enough. As part of the app’s sign-up questionnaire, users are asked: ‘How much investing experience do you have?’

If you choose ‘none’, the app rejects you from trading options, but then asks if you want to update your experience level.

Change the response to ‘not much’ and Robinhood approves.

‘How are those guardrails? How does that — how does that stop an 18-year-old from making risky trades that they don’t really understand?’ Dan said.

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Topics: News, App, Now, Robinhood, Stocks and Shares, suicide

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CBS News
  1. CBS News

    Alex Kearns died thinking he owed hundreds of thousands for stock market losses on Robinhood. His parents have sued over his suicide.