Robinhood sued by family over Alex Kearns suicide, thought he owed them $730,000

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Alex Kearns
Alex Kearns

The parents of Alex Kearns, 20, who died by suicide last year, filed a lawsuit against Robinhood. Kearns killed himself after he saw a $730,000 negative balance on his Robinhood app profile. The negative balance was a bug on the Robinhood app, and Kearns’ parents are suing the online trading platform over its “reckless conduct that directly and proximately caused Kearns’ death”.

Alex studied business in university and had gained interest in financial markets and investment since then. However, his heart-breaking story came to an end in June 2020 — 13 hours after he saw a $730,000 negative balance.

Kearns’ parents filed the complaint against Robinhood on Monday in Santa Clara County, California — seeking “unspecified damages for wrongful death, negligent infliction of emotional distress, and reckless business practices.”

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Alex Kearns left a note before suicide

The 20 years old trader left a note to his family where he accused Robinhood of allowing that much risk. Kearns said in the note that the puts he ordered and the shares sold “should have canceled out” but at that moment of trading, he had “no clue” what was happening.

“How was a 20-year old with no income able to get assigned almost a million dollars worth of leverage?” the note reads. “There was no intention to be assigned this much and take this much risk, and I only thought that I was risking the money that I actually owed.”

Kearns’ parents accused Robinhood in their lawsuit of targeting young inexperienced customers.

“Robinhood built out its trading platform to look much like a videogame to attract young users and minimize the appearance of real-world risk. Though Alex was merely a senior in high school when he opened an account with Robinhood and had little or no income, Robinhood determined he was qualified enough to enter into the world of trading sophisticated financial options.” The lawsuit stated.

Robinhood’s customer support caused Alex’ death, says parents

Furthermore, the Kearns family said that Robinhood has “virtually non-existent” customer support. The family said that their son tried to contact customer service multiple times but only received an auto-generated response in return. However, after Alex passed away, he received an email from Robinhood. The company told him that the negative balance was a bug.

The Lawsuit further explains: “Tragically, Robinhood’s communications were completely misleading, because, in reality, Alex did not owe any money; he held options in his account that more than covered his obligation, and the massive negative balance would have been erased by the exercise and settlement of the options Alex held”

“Alex Kearns’ death devastated us. Since June, we’ve made improvements to our options offering.” A spokesperson for Robinhood said.

In conclusion, Robinhood will not only be facing a lawsuit by the Kearns family. The online brokerage is also facing lawsuits from its angry clients. Robinhood users filed lawsuits against the company. Traders accused the company of advantaging hedge funds and restricting trading in GameStop and AMC stocks. Robinhood restricted trading in the stocks while the prices were soaring.

Robinhood is planning for an IPO in 2021.

” If you or someone you know is having thoughts of suicide. Please contact the National Suicide Prevention Lifeline at 1-800-273-TALK (8255)] “