Robinhood said they had made changes since Kearns’ devastating death. “Because they make it look like you owe $730,000 ($A946,000) when you really don’t owe anything,” Mr Blakeman told the outlet. “The information they gave him was just incredibly skewed and possibly completely wrong,” said Benjamin Blakeman, the Kearns family lawyer. In the suit expected to be filed on Monday, the parents said Robinhood “must be held accountable,” according to the news site. “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 told CBS, referring to a screener question that allows someone to trade even if they respond that they don’t have much experience. Ironically, the app got back to the amateur trader the day after his suicide, saying, “Great news! We’re reaching out to confirm that you’ve met your margin call and we’ve lifted your trade restrictions,” according to the report.ĭan said the app should have stronger checks in place to screen for trader experience. There was no customer service number for Alexander to call and while he did email Robinhood three times, he only received an automatic response that app reps would get back to him when they could, noting a possible delay in replies, the report said. “He thought he screwed up beyond repair.”Īlex had been trading options, rather than stocks, so the negative balance was probably a temporary amount that showed until the options settled to his account. “He thought he blew up his life,” Alex’s dad, Dan Kearns, said in an interview with the network. University of Nebraska student Alexander Kearns, who had begun dabbling in trading, ran into problems on June 11 when the app put a hold on his account showing that he was $US730,000 ($A946,000) in the red and that he needed to pay over $US170,000 ($A220,000) in the coming days,CBS This Morning reported. However, Robinhood restricted trading in the most volatile stocks on January 28, a move it said was done to meet capital requirements, sparking an outcry among users and demands for its executives to testify before Congress.The parents of a 20-year-old man who committed suicide after mistakenly believing he owed $US730,000 ($A946,000) to Robinhood plan to file a wrongful death suit against the stock trading app, according to a report. The app helped increase a wild rally in shares of video game retailer GameStop Corp and other companies out of favour with Wall Street hedge funds in what has been touted as a revolution in retail trading. The lawsuit comes amid growing scrutiny of Robinhood’s commission-free trading and seeks unspecified damages. In reality, the loss was covered by other options in Kearns’ account, according to the lawsuit. Kearns apparently believed an options trade placed through Robinhood had led to a $730,000 loss, far beyond the possible loss of about $10,000 that he had expected, according to the lawsuit. Monday’s lawsuit said Robinhood has an obligation to know its customers and ensure their trading strategies are appropriate but instead the broker preyed on inexperienced investors. “We were devastated by Alex Kearns’ death,” said a statement from Robinhood, which added that it was improving its educational materials and more live support staff, among other changes. Robinhood notified Alex Kearns in June of what he thought was a $730,000 loss on a trade and when he was unable to communicate with anyone at the company, the college student was thrown into a highly distressed mental state, the lawsuit stated.Īs a result, fearing he had obligated his family to repay the huge loss, he ran in front of a train and killed himself, according to the lawsuit, which was filed in California state court. The family of a 20-year-old United States stock trader who died by suicide sued the broker Robinhood for his death, citing its “misleading communications” that caused their son to panic over what he wrongly believed were huge market losses, according to a lawsuit filed in California Monday.
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