![]() ![]() The measures include adding more educational materials on options trading and new financial criteria and experience requirements for new customers seeking to trade some options. Robinhood, which is based in Menlo Park, California, issued a statement in response to the lawsuit Monday saying it was devastated by Kearns’ death and has since made improvements to its options offerings. “This resulted in a highly distressed mental condition in Alex, an uncontrollable impulse to commit suicide as the only option he could see,” according to the lawsuit. “Tragically, 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” options Kearns held, according to the lawsuit.Īfter not being able to speak with anyone from Robinhood, Kearns became more desperate and fearful of the mammoth financial obligation, according to the complaint. Then, after 3:30 a.m., Kearns got an email from Robinhood saying he needed to deposit more than $178,000 within seven days to begin to address the negative balance, according to the lawsuit. Kearns, desperate for answers, sent several emails to Robinhood’s customer support, but only received auto-generated replies, according to the lawsuit. 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. “We disagree with the allegations in the complaint by the Massachusetts Securities Division and intend to defend the company vigorously.Kearns received emails from Robinhood shortly after 11 p.m. In a statement to CBS News, Robinhood denied the state’s claims. In light of Kearns’ death, the state of Massachusetts filed a formal complaint against Robinhood in December for its “gamification”of stock trading that is a “deliberate” attempt to lure in young, inexperienced users. And possibly completely wrong, because they make it look like you owe $730,000 when you really don’t owe anything,” said Benjamin Blakeman, one of the Kearns family attorneys. “The information they gave him was just incredibly skewed. If he had cashed in other options he’d purchased, his lawyers said, he may have even made a profit. “We don’t want another family to go through this,” said his mother.Īlex will never know that he likely didn’t lose money on his Robinhood trades. News of the suit arrives after Robinhood ran a Super Bowl ad to pull in new users amid their ongoing backlash. While Robinhood has applied some protections following Kearns’ death, his family doesn’t believe the app has gone far enough and has a filed wrongful death lawsuit. He was notified by email a day after his suicide. Had a Robinhood customer service rep gotten back to him sooner, Kearns would’ve been informed that his options were covered. He left behind a note blaming Robinhood for failing to protect a kid who was barely out of high school and placing him in a precarious position that an amateur trader should have never been in.Ĭompounding the tragedy is the fact that Kearns wasn’t in debt. Fearing that he’d just ruined his life and his family’s finances, Kearns committed suicide. When Kearns attempted to reach customer service, all he received was a canned reply that his issue would eventually be looked into, but he should anticipate a delay in response. ![]() Due to a series of errors, the investment app led Kearns to believe he owed $750,000 on a risky stock bet, and the young man received an email demanding an immediate $170,000 payment. Last June, before Robinhood became embroiled in the GameStop stock surge, the investment trading app was implicated in the death of 20-year-old Alex Kearns of Massachusetts. ![]()
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