Robinhood got sued on Monday, by the family of a trader who killed himself, reports CNBC. The trader in question was 20 years old at the time of death, and he killed himself because he believed he lost a huge amount of money.
Robinhood sued by family of trader who killed himself last year
His name is Alex Kearns, and he killed himself in June last year. He had a negative $730,165 cash balance on Robinhood at the time, well, at least that’s what it seemed like.
Alex Kearns apparently misunderstood the Robinhood financial statement, and was protecting his family from the financial obligation. In the suit, it is stated that Mr. Kearns made three attempts to contact Robinhood customer service regarding the massively negative balance.
His messages did not receive a response from an actual person, only automated replies. Alex Kearns actually left a note to his family, accusing Robinhood of allowing him to pile on too much risk, says CNBC, who saw the note. He said that the shares sold “should have cancelled out”.
Mr. Kearns apparently had no idea what he was doing. In his note, he said the following: “How was a 20 year old with no income able to get assigned almost a million dollars worth of leverage?”
He was quite lost, it seems
He only thought he was risking the money that he actually owned. That is also something that he mentioned in his note. A Robinhood spokesperson did talk to CNBC regarding the matter, saying the following: “We were devastated by Alex Kearns’ death. Since June, we’ve made improvements to our options offering.”
In the lawsuit, it is noted that Robinhood’s “reckless conduct directly and proximately caused the death of one of its victims,” though it remains to be seen what will happen.
Robinhood managed to become extremely popular with first-time investors. It has grown from 1 million users in 2016 to more than 13 million (those numbers are from last spring).
Robinhood also came under scrutiny quite recently, as the company is facing class-action lawsuits from clients after the decision to restrict trading in certain securities during the recent GameStop controversy.
It remains to be seen what will happen with this case, but Alex Kearns’ family, and Robinhood are headed to court.