“If I could have gotten someone … I would be alive today,” Dan told CNN Business in an interview.
The Kearns family sues Robinhood for the illegal death of their son, who, like a growing number of novice traders, resorted to the free trade app to access sophisticated financial instruments, such as options.
The tragedy has drawn attention to the potential dangers of the free trade boom that Robinhood and its gamified platform have helped initiate.
“It’s almost like being martyred just to save us from what I thought would be a huge financial burden, which of course isn’t the case,” Dan said.
Robinhood under fire
Alex Kearns ’Robinhood account showed a negative balance of $ 730,000, which is a lot more money than he had in his name, according to the lawsuit.
“Anyone would be in a panic to see these numbers on the screen,” her mother, Dorothy, said in the interview.
Alex did not realize that his negative balance would have been erased by the exercise and settlement of options he had, the family said. I really didn’t owe that amazing sum.
“He shouldn’t have been allowed to change these complicated options in the first place. He had no training, no income, no qualifications to do these sophisticated trades,” Dan said.
The lawsuit, which describes Alex as a “true fool with a fantastic sense of humor” and a “heart of gold,” argues that Robinhood attracts inexperienced investors to take big risks, without providing customer support. and the necessary investment guide.
In a statement, Robinhood said that to determine eligibility for options trading, the company assesses clients ’investment experience and knowledge, investment goals and financial information such as revenue. For existing customers, Robinhood said it considers its business on the platform.
Robinhood added that they “always seek to comply with applicable rules and regulations” of the Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA).
Following the Kearns lawsuit, Robinhood said it made a number of improvements to its options offering, including providing guidance to help customers, updates on how it displays purchasing power, and live voice support for customers with open option positions.
“We were devastated by the death of Alex Kearns,” Robinhood said. “We remain committed to making Robinhood a place to learn and invest responsibly.”
Frenetic search for answers
The Kearns family’s nightmare began on June 11, 2020, when the holder of the options Alex had sold exercised his options, forcing the 20-year-old to buy the underlying title, according to demand.
At 11:01 p.m., Robinhood notified Alex Kearns by email that his account was restricted, meaning he could not make transactions or withdrawals, according to the lawsuit. Minutes later, another email indicated he had to buy more than $ 700,000 in shares as part of options trading, according to the lawsuit.
Although Alex thought he could lose only $ 10,000 at most, after seeing the app Robinhood believed he had somehow lost $ 730,000, according to the lawsuit.
Desperate for answers, Alex emailed Robinhood for help three times that night and the next morning, the family said.
At the time, Robinhood sent customer service requests exclusively by email, Dan said.
Robinhood did not answer CNN Business’s questions about customer service.
Alex never heard from Robinhood beyond the automatically generated responses, according to the lawsuit. Life ended on June 12th.
“I was dismayed,” Dan said upon learning that his son tried and failed to get help from Robinhood. “It was really bad, to be honest, because … I knew why it was happening. I only visualized what was going on when I was writing the notes and seeing these emails, without being able to contact anyone.”
“I needed some help”
Before he died, Alex left a note indicating his confusion about options trades and explaining that he did not want to die.
“The tickets I bought / sold should also have been canceled, but I also have no idea what I was doing now in retrospect,” Alex wrote, according to the lawsuit. “There was no intention of me being assigned so much and taking that risk, and I just thought I was risking the money I really owned.”
Alex’s parents expressed frustration that their son did not have the means to communicate more quickly with Robinhood.
“He’s in a full state of panic. He needed some help. I think that’s all it would have taken to calm him down,” Dan said.
In addition to the unjustified death, the lawsuit filed by the Illinois family accuses Robinhood of neglecting emotional issues and unfair business practices. The damages they are seeking will be determined at a later date.
Changes to Robinhood
Alex’s parents expressed hope that their lawsuit would raise awareness of some of the risks involved in trading in Robinhood.
After Alex’s death, Robinhood CEO Vlad Tenev and former CEO Baiju Bhatt wrote that they were “personally devastated by this tragedy” and vowed to improve their platforms.
“We are grateful for this message. And he supported those words with a very important donation for suicide prevention,” Dan said, referring to Tenev. “I think he regrets it and I’m sorry about our situation.”
The company announced in June that it would donate $ 250,000 to the American Foundation for Suicide Prevention and urged people in need to seek help.
Robinhood said this week that recent changes include new financial criteria and revised experience requirements for new clients who want to negotiate advanced options strategies and plans to expand it to other situations. Robinhood also changed its system to increase email support requests from some option traders and provide live voice assistance for clients with open options positions.
The Kearns family expressed support for these changes, but said Tenev and Robinhood need to take further action, including additional telephone assistance.
“I don’t think I’ve made adequate progress in protecting immature novice investors like my son,” Dan said.
When asked to respond to those who would argue that Alex was responsible for the investment decisions she made, Dorothy said it wasn’t about her son gambling too much money.
“It would be different if I made investment decisions and lost a lot of money based on those decisions and took my life,” he said. “It would still be tragic, but we wouldn’t be here today … because that would have been his fault.”
Instead, Dorothy said she believes Robinhood is responsible for leaving her son confused and unanswered.
“If I had received a response from Robinhood or if there was some kind of waiver on screen,” he said, “it wouldn’t have been a problem.”