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Robinhood sued family who committed suicide12/26/2023 ![]() ![]() That left Kearns’ account with a negative balance of $730,000 on a trade that he had understood would be limited to a maximum loss of less than $10,000, the lawsuit says. on June 11, informing him that his account was restricted and that he was required to buy $700,000 in shares as a result of an options trade, according to the lawsuit. ![]() Kearns received emails from Robinhood shortly after 11 p.m. The Kearns family also accuses Robinhood of having "virtually non-existent" customer service as they said Alex reached out multiple times, but only received automated responses. "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."Ĭommunity alert issued as police search for Lincoln Park sexual assault suspect "Robinhood built out its trading platform to look much like a videogame to attract young users and minimize the appearance of real-world risk," the lawsuit stated. “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.”Īccording to the lawsuit, Robinhood targets young and inexperienced customers by design. ![]() “How was a 20-year old with no income able to get assigned almost a million dollars worth of leverage?” the note reads. He claimed the puts he bought, and the shares sold “should have canceled out” but in hindsight, he said he had “no clue” what he was doing. In a note Kearns left to his family, the 20-year-old accused Robinhood of allowing him to pile on too much risk. The complaint, filed Monday in state court in Santa Clara County, California, seeks unspecified damages on behalf of the parents and sister of Kearns for wrongful death, negligent infliction of emotional distress and unfair business practices. Other international helplines can be found at parents of a Naperville college student who died by suicide last year after mistakenly believing he had a $730,000 negative balance on the trading app Robinhood filed a lawsuit against the company, saying its "reckless conduct directly and proximately caused" their son's death.Īlex Kearns, 20, who was studying business and had a gowing interest in financial markets, died in June 2020, 13 hours after he checked his account on Robinhood. In the UK and Ireland, Samaritans can be contacted on 116 123 or email or In Australia, the crisis support service Lifeline is 13 11 14. In the US, the National Suicide Prevention Lifeline is 1-80. However, Robinhood restricted trading in the most volatile stocks on 28 January, a move it said was done to meet capital requirements, sparking outcry among users and demands for its executives to testify before Congress. The app helped fuel a wild rally in shares of the video game retailer GameStop and other companies out of favour with Wall Street hedge funds in what has been touted as a revolution in retail trading. The lawsuit, seeking unspecified damages, comes amid growing scrutiny of Robinhood’s commission-free trading. In reality, the loss was covered by other options in Kearns’s 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 had an obligation to know its customers and ensure its trading strategies were appropriate, but instead the broker preyed on inexperienced investors. “We were devastated by Alex Kearns’s death,” said a statement from Robinhood, which added that it was improving its educational materials and providing more live support staff, among other changes. As a result, fearing his family would have to repay the huge loss, he killed himself, according to the lawsuit, filed in California state court. ![]()
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