He Thought He Lost $730,000 On Robinhood And Killed Himself. Now His Parents Are Suing.

 

Alex Kearns was still in high school when he began using the stock-trading app Robinhood to make investments. He started buying and selling stocks with his owns savings from birthday gifts and his summer job – a total of about $5,000, his father told CBS News.

His parents, Dan and Dorothy, said they spoke to Alex about responsible investing, believing he had “limited exposure” to the risks of stock-market trading. Robinhood, however, makes it incredibly easy for users to buy and sell options, a riskier investment. CBS determined that all a user has to do to be approved by Robinhood to buy and sell options is to check that they at least have “not much” experience in trading. That’s it.“I don’t understand how they allowed that to happen in the first place,” Dan told the outlet.

On June 11, 2020, Alex looked at his Robinhood account and discovered it was restricted and showed an apparent negative balance of $730,000. Early the next morning, at 3:26 a.m., the company sent Alex an automated message saying the now-20-year-old needed to take “immediate action” and pay more than $170,000 in the next few days.

“He thought he blew up his life. He thought he screwed up beyond repair,” Dan told CBS.Panicked, Alex tried to contact someone at Robinhood, but since there was no customer service phone number, he sent three emails to its support account, trying to understand what had happened.

“I was incorrectly assigned more money than I should have, my bought puts should have covered the puts I sold. Could someone please look into this?” Alex wrote in the emails, according to CBS.

He received an automated message in response saying, “Thanks for reaching out to our support team!” It added: “We wanted to let you know that we’re working to get back to you as soon as possible, but that our response time to you may be delayed.”Later that day, Alex committed suicide. He left behind a note to his parents that asked “How was a 20-year-old with no income able to get assigned almost $1 million worth of leverage?”

“The puts I bought/sold should have cancelled out, too, but I also have no clue what I was doing now in hindsight. There was no intention to be assigned this much and take this much risk, and I only thought that I was risking the money that I actually owned. If you check the app, the margin investing option isn’t even ‘turned on’ for me. A painful lesson. F*** Robinhood,” he added.

One day after Alex’s suicide, Robinhood sent another automated email, which seemed to indicate the issue was fixed and that Alex didn’t owe money.

“Great news!” The email read, according to a copy obtained by CBS, “We’re reaching out to confirm that you’ve met your margin call and we’ve lifted your trade restrictions. If you have any questions about your margin call, please feel free to reach out. We’re happy to help!”

Alex’s parents are suing the company for “wrongful death, negligent infliction of emotional distress and unfair business practices,” CBS reported.