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The family of a student who took his own life after believing he lost nearly $ 750,000 on Robinhood filed a wrongful death lawsuit against the brokerage firm on Monday.
The mother, father and sister of Alex Kearns, 20, who died in June, have filed a lawsuit in California state court, charging Robinhood with wrongful death, negligent infliction of emotional distress and of unfair trade practices, according to the first complaint. obtained by CBS News.
Kearns’ family allege that “the reckless conduct of the company directly and immediately caused the death of one of its victims” through “misleading communications” on its investments and its “virtually non-existent” customer service, The Wall Street Journal reported, citing the complaint.
Kearns was a University of Nebraska-Lincoln student who began using Robinhood in high school. He started an options trade through the stock trading app, believing his highest possible loss would be less than $ 10,000.
Last June, Kearns learned that his account was locked out due to an apparent negative balance of $ 730,000. Robinhood sent an automated email late at night at 3:26 a.m. asking Kearns to “take immediate action” to pay around $ 178,000 in a matter of days, CBS News reported.
The complaint states that Kearns emailed the Robinhood support team three times that night and the next morning, asking for help and saying, “I was wrongly allocated more money. that I should have, my bought put should have covered the put I sold. ” He reportedly received only automated responses and Robinhood offered no customer service phone numbers.
The complaint also alleges that Robinhood did not notify 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 committing suicide, Kearns asked how he was able to conduct high-stakes transactions, saying he had “no idea what I was doing now in hindsight” and believed that he was “risking the money I actually owned,” according to CBS News.
“Although Alex’s panic and confusion was clearly caused by the Robinhood cheater communications, Robinhood was impossible to reach at the most critical time for repair the damage he had created, ”says the complaint.
Robinhood did not immediately respond to The Hill’s request for comment, but told the Journal he was “devastated by the death of Alex Kearns.”
“We remain committed to making Robinhood a place to learn and invest responsibly,” a spokesperson told the newspaper, noting that the company is now providing additional tools and options training.
The spokesperson also said that Robinhood had changed its eligibility criteria for options trading, adjusted its customer service response to escalate some requests for help and created “live voice support” for those who had. open or recently expired option positions.
The brokerage firm has grown in popularity over the past year during the coronavirus pandemic, as millions of users have joined the platform.
Robinhood is also facing class action lawsuits from customers after the company curtailed trading in GameStop and other actions as part of the r / WallStreetBets subreddit campaign that rocked Wall Street earlier this month. -this.
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