February 10, 2021 
Robinhood is being sued for the wrongful death of a 20-year-old college student who died by suicide last summer after he saw a negative balance of $730,000 in his trading account and mistakenly believed that was the sum of money he owed.
The parents and sister of Alexander Kearns accused Robinhood of luring inexperienced investors like their son to take big risks in sophisticated financial instruments such as the options trading he engaged in — without providing the necessary customer support and investment guidance.
“Robinhood built out its trading platform to look much like a videogame to attract young users and minimize the appearance of real-world risk,” reads the lawsuit filed Monday in California by Kearns’ parents Dan and Dorothy and sister Sydney.
In addition to wrongful death, the complaint filed by the Illinois family accuses Robinhood of negligent infliction of emotional stress and unfair business practices. The damages they are seeking will be determined at a later date.
“Tragically, Robinhood’s communications were completely misleading because, in reality, Alex did not owe any money,” the lawsuit said.
The tragedy illustrated the potential dangers of the free-trading boom set off in large part by Robinhood, which has enjoyed explosive growth during the pandemic.
Kearns, who started using Robinhood when he was a senior in high school, died by suicide in June after placing an options spread trade containing a risk “Alex did not understand,” according to the lawsuit. His Robinhood account reflected a negative cash balance in the amount of $730,000 — far more money than he had, the lawsuit said.
“He was in a complete panic. His panic and desperation grew as he was unable to communicate over a number of hours with anyone at Robinhood,” the lawsuit said, adding that he repeatedly tried and failed to reach out to representatives at the company.
Adding to the tragedy, Kearns didn’t realize his massive negative balance would have been erased by the exercise and settlement of options he held, the lawsuit said.
“Robinhood never bothered to explain this to Alex or respond to his increasingly desperate pleas for help,” the lawsuit said.
The family pinned the blame for Kearns’ panic squarely on Robinhood.
“This resulted in a highly distressed mental condition in Alex, an uncontrollable impulse to commit suicide as the only option he could see,” they said.
– Robinhood Markets, Inc. is an American financial services company headquartered in Menlo Park, California, known for offering commission-free trades of stocks and exchange-traded funds via a mobile app introduced in March 2015.
– CNN
No comments yet... Be the first to leave a reply!