reached an agreement with attorneys general from Pennsylvania, Iowa, Massachusetts, New Jersey and North Carolina to refund $4.2 million to its credit card customers who were overcharged. Alex Kearns' family claimed in the suit that he was unable to get in touch with anyone at Robinhood after the broker notified him of a $730,000 loss on a trade, and was subsequently put in a distressed mental state. over "misleading communications," Reuters reported. 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 puts he held.ĭespite his “desperate pleas for help,” the suit says, Robinhood failed to explain the situation to Kearns, which put him in a “highly distressed mental condition” and led to an “uncontrollable impulse to commit suicide,” as he also believed “his family would somehow get stuck with the obligations unless he did something drastic to protect them.” Nonetheless, the trading app was “impossible to reach at the most critical moment,” and Kearns took his own life on June 12, 2020.* The family of a stock trader, who died by suicide, has filed a lawsuit against Robinhood Markets Inc. Tragically, it turned out Kearns didn’t owe the vast sum, or indeed any money at all, and had simply misunderstood what his account balance reflected. “The information available to Alex at that point indicated that he somehow lost $730,000 on a trade which he had understood to be limited to a maximum loss of less than $10,000,” the complaint continued.
He was met with an auto-generated reply and received no answers to repeat inquiries as he became “extremely concerned and upset.” When his account notified him of the large negative balance, Kearns attempted to reach out to Robinhood’s customer service team, but to no avail. Kearns – who was only a senior in high school when he first opened his Robinhood account – became convinced he owed some $730,000 in securities after engaging in complex trades last year, a sum he “had no possible means of paying,” the lawsuit states. Read more: Turkey accuses Greece of migrant 'pushbacks' into Turkish waters The family said the company used “aggressive” tactics to encourage Kearns, a college student with no income to speak of, to “take big risks with the lure of tantalizing profits,” also arguing that Robinhood designed its platform to “look much like a video game to attract young users and minimize the appearance of real-world risk.” Indeed, it was almost inevitable that an event like this would occur as a result of such reckless behavior.Īlso on rt.com Reddit blows ‘entire marketing budget’ on 5-second Super Bowl ad… with a nod to GameStop thriller
The distress, and the suicide, of this victim was foreseeable. reckless conduct directly and proximately caused the death of one of its victims. “‘How was a 20-year-old with no income able to get assigned almost $1 million worth of leverage?’ These were the last known written words of 20-year-old Alex Kearns before he rode his bicycle to a railroad crossing and ran in front of an oncoming train,” the Kearns family wrote in the court filing, adding “The only ones with the answer to Alex’s question are defendants Robinhood Markets Inc., Robinhood Financial LLC and Robinhood Securities LLC.” The family of a Robinhood investor who took his own life last year has sued the platform, alleging it misled the 20-year-old into thinking he was nearly $1 million in debt and that “reckless tactics” directly led to his death.įiled in California’s Santa Clara County Superior Court on Monday, the 30-page complaint from the family of Alex Kearns accuses the online trading app of luring a young, inexperienced investor into transactions he “did not understand” and misleading him to believe he had incurred hundreds of thousands of dollars in obligations through the platform.
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