Lawsuit Filed Against Robinhood After Suicide of 20-Year-Old Trader

The parents of 20-year-old Alex Kearns sue Robinhood, alleging it drove him to suicide.

The parents of 20-year-old Alex Kearns filed a lawsuit against the crypto-friendly platform Robinhood. They accused the company of driving their son to suicide.

The trader did not have a steady income and used his own savings to trade on the platform. He began trading options, and in June 2020 received a notification of an account negative balance of $730,000.

In the same month, a relative published a screenshot of Alex’s account on Twitter.

I saw @RobinhoodApp response and can confirm they did reach out. The family isn’t ready to speak yet. Since they can’t release account details here’s the screenshot. pic.twitter.com/uqeDhro7aJ

— Bill Brewster (@BillBrewsterSCG) June 16, 2020

Robinhood, in an email, demanded the trader deposit about $178,000 within a week. In an interview with CBS News, Alex’s parents said that before his death he had unsuccessfully tried to contact customer support.

“He decided that he had ruined his life”, said Alex’s father.

The platform did not inform the user that there were options on his account that more than covered the liabilities. An email lifting trading restrictions arrived the day after his death.

Later, Robinhood pledged to overhaul the app, educate users and transfer $250,000 to the suicide-prevention fund.

In the lawsuit filed in the Superior Court of Santa Clara County, California, the family quoted Kearns’s line from his suicide note:

“How could a 20-year-old with no income access $1 million through leverage?”

According to Alex’s parents, Robinhood’s “aggressive tactics” and focus on inexperienced investors contributed to the tragedy.

Complaint by ForkLog on Scribd

In December 2020, Robinhood’s marketing activity drew the attention of the Commonwealth Secretary of the Massachusetts Securities Department. There, authorities said, the platform exposed customers to “unwarranted trading risks” and fell short of fiduciary standards.

In the same month, the U.S. Securities and Exchange Commission secured from Robinhood a $65 million payout for misleading users by claiming the service did not charge trading commissions.

In January 2021, the platform was at the centre of the GameStop and Dogecoin controversy.

On February 18, the House Committee on Financial Services will examine Robinhood’s actions. Lawmakers are interested in whether there was a collusion between the service and hedge funds.

Follow ForkLog news on VK!