Family sues Robinhood, after son loses $730,000 on the trading app and commits suicide out of sheer panic
"We are all investors... no matter how unqualified you are."
Robinhood has been making news quite a lot recently. The r/WallStreetBets fiasco, dragged them into the spotlight last month, after the trading app blocked users from buying GameStop stock (and a handful of others) in an attempt to save their hedge fund buddies at Melvin Capitol.
The backlash over that was intense: a class-action lawsuit was almost immediately filed against them, and their CEO is now slated to testify before congress later this year.
And then, just on Monday, another lawsuit was filed against them — that has nothing to do with GameStop. But, which has everything to do with the nature of this increasingly distrustful trading company.
Alex Kearns, 20, had been trading on Robinhood since he was in high school. He’d been approved to buy and sell complex options trades which can apparently fluctuate over several days, leaving temporary balances and debts before they iron out. On June 12th of 2020, Kearns’ debt on Robinhood had mushroomed to a staggering -$730,000 — far more than the young investor actually had to trade with.
He sent them a panicked email, asking for someone to look into it. But only received an automated reply, stating they were “working on getting back” to Kearns.
Later that day, he killed himself.
In his suicide note, he questions why he was allocated “almost $1 million in leverage” and admitted to having “no clue” what he was doing with it. Now, over nine months later, his family has filed legal action against the trading app — because, they assert, Alex’s blood is on their hands.
“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, filed in California by Kearns' parents and sister, reads.
They allege that if someone had answered his email, their son would still be here today. Instead, he got an automated response and now he’s gone.
Robinhood’s response to these allegations?
"We were devastated by Alex Kearns' death," a spokesperson for the app told CBS news. "In early December, we also added live voice support for customers with an open options position or recent expiration, and plan to expand to other use cases. We also changed our protocol to escalate customers who email us for help with exercise and early assignment. We remain committed to making Robinhood a place to learn and invest responsibly."
Benjamin Blakeman, one of the Kearns family’s lawyers, said that the information given to Alex was extremely skewed and possibly even completely false.
“They make it look like you owe $730,000 when you really don't owe anything,” he told CBS. “That could panic just about anybody."
Whether or not Robinhood ends up compensating the Kearns’ for Alex’s death is up it the courts. But what’s become increasingly obvious, between Kearns’ death and the GameStop controversy/market manipulation, is that Robinhood really doesn’t give a flying fuck about its users or how much they stand to lose — even if its their lives.