Robinhood sued after amateur trader’s suicide

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The family of a young man, who committed suicide when he was convinced he had suffered very heavy losses on Robinhood online brokerage, filed a complaint against the company on Monday.

Alex Kearns, a 20-year-old college student, died on June 12, 2020 after discovering that his account on Robinhood had a negative balance of over $ 730,000. There he bought and sold options – fairly complex and highly speculative financial products.

“This case focuses on the aggressive tactics and strategy employed by Robinhood to lure inexperienced and untrained investors, like Alex, to take big risks with the lure of tempting profits,” says the complaint filed by the parents and sister of Alex Kearns in court in Santa Clara, California.

Society “devastated” by the death of the young man

According to the document, the young man did not owe this money but was too inexperienced to understand the statement sent by Robinhood. He did seek to contact the online broker’s customer service three times within hours but only received automatic responses, the complaint claims.

He then found himself in a state of “complete panic”, persuaded that he had to reimburse the entire amount mentioned by Robinhood. His family claims payment of damages without specifying an amount.

Read more: These robinhooders looking for easy money

In a message sent to AFP, a spokeswoman for Robinhood said the company was “devastated” by the death of the young man and assured to have subsequently improved its offer, in particular by providing more advice. “We remain committed to making Robinhood a place to learn and invest responsibly,” said the spokesperson.

Limited transactions on the platform

Robinhood is currently in the hot seat for its role in a whole different matter: the speculative frenzy around titles like GameStop, a chain of video game stores whose stock has recently skyrocketed and is causing hedge funds to tremble.

Flooded with demands, Robinhood had to urgently strengthen its capital to, in accordance with stock market regulations, provide a certain security deposit.

On the subject: GameStop and the limits of market regulation

But while waiting to be able to raise a total of $ 3.4 billion, he had to temporarily limit transactions in certain securities, prompting some users of the platform to file a collective complaint.