The parents of a 20-year-old college student who killed himself after seeing a negative cash balance of more than $730,000 in his account on the Robinhood stock-trading app are now suing the company for wrongful death. According to a report in The Daily Mail, Alex Kearns died on June 12, 2020 after apparently throwing himself in front of a freight train in his hometown of Naperville, Illinois.
Wrongful Death Lawsuit
His parents Dan and Dorothy Kearns said in an interview with CBS This Morning that Robinhood pushes young and inexperienced customers like their son to engage in risky trading. The couple stated in the lawsuit, which was filed in California state court, that Robinhood provided no “meaningful customer support” when their son reached out for help with this issue.
The couple said their son had come home early because of the pandemic. He was interested in investing and opened an account with Robinhood before he graduated from high school, his mother said. She said he began investing money earned from lifeguarding and funds given to him from grandparents – all amounting to about $5,000. The couple said they did not realize Robinhood had approved their son to buy and sell options, which has the potential for huge losses.
The Kearns family is filing a lawsuit alleging wrongful death, negligent infliction of emotional distress and unfair business practices. Alex Kearns left a heartbreaking suicide note asking how he was even able to get assigned almost a million dollars worth of leverage. As it turned out, the negative balance of $730,000 was only temporary and he was not in fact in debt as he believed.
However, on June 11, Robinhood sent him an automated email demanding Alex take immediate action and pay them $170,000. The day after Alex died, Robinhood sent an automated email saying he didn’t owe any money. Since launching in 2013, Robinhood has soared in popularity attracting 13 million users with a median age of 31. Unlike trading stock, in which it is impossible to lose more money than you initially invest, in some cases, options trading could expose traders to losing an infinite amount of money.
Holding Corporations Accountable
Our thoughts and prayers are with this family that has suffered a tremendous, irreparable loss. There is no question that this is a death that could have been prevented had Robinhood acted in a more responsible manner. We encourage those who are new to the stock market to heed the advice of experts who are warning people to exercise caution before investing especially during a time when the market is abundant with uncertainties. If you or someone you know needs support, please contact the National Suicide Prevention Lifeline at 1-800-273-8255.