Robinhood Financial, already under scrutiny for its business practices during the recent GameStop flap, is now the subject of a lawsuit filed by the family of a suicide victim who believed he owed more than $700,000.
Alex Kearns, 20, was a student at the University of Nebraska-Lincoln when he found trouble through stock trades and took his life last June.
Furthering the tragic nature of the story, the novice stock trader was not in desperate financial straits – and the inability to communicate that fact likely means the suicide could have been prevented.
“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.
The complaint, filed Monday in state court in Santa Clara County, California, claims Robinhood’s actions “directly” led to their son’s death.
Kearns’ parents and sister said in the suit that Robinhood’s “aggressive tactics and strategy to lure inexperienced and unsophisticated investors, including Alex,” were to blame. They said their son was shocked at what he owed and tried to contact Robinhood for clarification, but received only a seemingly automated email response.
They said Kearns left a suicide note that included, “How was a 20-year-old with no income able to get assigned almost a million dollars’ worth of leverage?”
A Robinhood statement read, in part, “We were devastated by Alex Kearns’ death. Since June, we’ve made improvements to our options offering.”
Those options, according to the statement, include “revised experience requirements for new customers,” among other upgrades and changes.
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