Robinhood sued by family of college student who took his life
The family of a college student who took his life after thinking he’d lost nearly $750,000 on Robinhood filed a wrongful death lawsuit against the stock-trading company on Monday.
The mother, father and sister of 20-year-old Alex Kearns, who died in June, filed a lawsuit in California state court accusing Robinhood of wrongful death, negligent infliction of emotional distress and unfair business practices, according to the complaint that was first obtained by CBS News.
Kearns’s family alleges the company’s “reckless conduct directly and proximately caused the death of one its victims” through “misleading communications” about his investments and “virtually nonexistent” customer service, The Wall Street Journal reported, citing the complaint.
Kearns was a University of Nebraska-Lincoln student who had started using Robinhood during high school. He began an options trade through the stock-trading app, thinking his highest possible loss would be less than $10,000.
Last June, Kearns learned his account was locked because of an apparent negative balance of $730,000. Robinhood sent a late-night automated email at 3:26 a.m. requesting Kearns take “immediate action” to pay about $178,000 in a few days, CBS News reported.
The complaint says that Kearns emailed Robinhood’s support team three times that night and the next morning, requesting assistance and saying, “I was incorrectly assigned more money than I should have, my bought puts should have covered the puts I sold.” He allegedly received only automated replies, and Robinhood offered no customer service phone number.
The complaint also alleges that Robinhood failed to inform Kearns that he may have had options he could use that would have “more than covered his obligation,” the Journal reported, according to the complaint.
In a note to the family before killing himself, Kearns questioned how he was able to conduct high-stake trades, saying he had “no clue what I was doing now in hindsight” and thought he was “risking the money that I actually owned,” according to CBS News.
“Though Alex’s panic and confusion were clearly caused by Robinhood’s misleading communications, Robinhood was impossible to reach at the most critical moment to repair the damage it had created,” the complaint said.
Robinhood did not immediately respond to The Hill’s request for comment but told the Journal that it was “devastated by Alex Kearns’ death.”
“We remain committed to making Robinhood a place to learn and invest responsibly,” a spokesperson told the newspaper, noting the company now provides additional tools and education about options.
The spokesperson also said Robinhood has edited its eligibility requirements for options trading, adjusted its customer service response to escalate certain requests for help, and created “live voice support” for those with open or recently expired options positions.
The stock-trading company has grown in popularity in the last year during the coronavirus pandemic as millions of users joined the platform.
Robinhood is also facing class-action lawsuits from customers after the company restricted trading in GameStop and other stocks amid the r/WallStreetBets subreddit campaign that rocked Wall Street earlier this month.