Baller Alert It's a lifestyle!
The family of a 20-year-old man who committed suicide last summer after thinking he was in debt to Robinhood for $730,000 is suing the company.
According to CNN, the parents and sister of Alex Kearns filed the wrongful death lawsuit on Monday in California. They allege that the company lured in inexperienced investors and enticed them to make risky investments without providing the proper investment guidance or the necessary customer support.
“Robinhood built out its trading platform to look much like a videogame to attract young users and minimize the appearance of real-world risk,” according to the suit.
The lawsuit alleges wrongful death, negligent infliction of emotional stress, and unfair business practices. The damages sought by the family will be determined at a later date.
“Tragically, Robinhood’s communications were completely misleading because, in reality, Alex did not owe any money,” the suit said.
Kearns, who began using Robinhood when he was in high school, committed suicide in June after making a risky trade. He panicked after his account reflected a negative $730,000. He reached out to Robinhood but grew more and more frustrated when he did not hear back.
It turned out that his massive negative balance would have been erased by the exercise and settlement of options he held. Kearns did not owe the balance.
In a statement, Robinhood said it has made improvements to its options offering. Those improvements include providing guidance to help customers, updates on how it displays buying power, and live voice support for customers with open options positions.
“We were devastated by Alex Kearns’ death,” Robinhood said. “We remain committed to making Robinhood a place to learn and invest responsibly.”
The trading app recently came under fire after a Reddit group caused market turmoil by driving up GameStop stock price. As a result of the surge, Robinhood restricted trading on GameStop stocks, causing outrage from users and lawmakers.
